When filing a Chapter 7 bankruptcy schedule J, if your monthly debt exceeds your monthly income, what happens?

Question

Jeffrey Solomon · Answer

This is not unusual.  But if there is a big difference the trustee will ask how you are making up the difference?  Is family helping?

Susan Taylor · Answer

If your budget more than consumes your income, that's perfect for Ch. 7.

William Rubendall · Answer

Your monthly expenses in schedule J cannot exceed your income. Look at the reality of what your earn and what your spend. You cannot spend more than you have. If your expenses exceed your income you are receiving income from  someone, perhaps relatives or savings or another source. Eliminate the expenses on schedule J that you are not actually spending.

Sanaz Bereliani · Answer

Nothing that is good. If your monthly income was greater than your monthly expenses you wouldn't qualify for chapter 7 because you would show that you do have enough money to pay your creditors. In chapter 7 you are asking for a discharge, stating that you do not have enough income to cover your monthly expenses and also your debts.

Roger Bus · Answer

Bankruptcy attorneys in a Chapter 7 case usually show that Schedule I   (income) is equal to or lesser than Schedule J (ongoing living expenses). If   your Schedule I is far greater than Schedule J, then the Court may believe you   have "disposable income" and should be in Chapter 13.

Joseph F. Hook · Answer

In filling out schedule J put in your monthly living expenses.   Include debt payments that are secured by your home or car that you intend on continuing to pay.  Do not include in schedule J payments on unsecured debt that you anticipate will be discharged.

Asaph Abrams · Answer

I presume the Schedule-J-relevant term "expenses" is confused for "debt." Assuming that, a negative figure on Schedule J line 20.c. demonstrates that the debtor is "in the red" which would suggest the merit of a claim for bankruptcy debt-relief.

Jeffrey Cook · Answer

That is normally how it is in a Chapter 7.  It means that you have no disposable income to commit to a hypothetical plan in Chapter 13 (assuming your expenses are necessary and reasonable).  So, don't worry about it.

Robert De Groot · Answer

That is the very first step in determining whether someone is bankrupt. That is, whether their monthly expenses exceed their income. What happens? Well the goal is a discharge, a clean slate, and that is probably what you will get, especially if you hire an experienced attorney.

Pamela Stewart · Answer

Actually, that is very common.  The only time it has come into play is when my client wants to enter into a vehicle reaffirmation.  One of our judges in Houston requires you to attend  a hearing and explain how you can afford to make the vehicle payments if  your budget is upside down.

Nelson Brinckerhoff · Answer

List your living expenses and income.  You do not list your debts you plan to discharge which you will not pay, only post-filing living expenses.

Edward Olson · Answer

I am afraid your question cannot be answered without more information.      As a rule, people who can pay all their monthly expenses do not file for bankruptcy.  However, you really need to talk to your attorney to see if your situation will be a problem.

Glen Edward Ashman · Answer

It raises a question as to why your numbers are wrong.  It's impossible to spend what you do not have. It also affects reaffirmations.  Discuss this with your lawyer.

Burton J. Green · Answer

Assuming that you have accurately stated your income in schedule I and your   actual current expenses in schedule J, and your means test says that you  are  eligible to file chapter 7, then nothing happens if your expenses exceed  your  income.  That is often the situation when someone is forced into   bankruptcy.    However, if you will be reaffirming a debt, usually a  car loan,  you might have to demonstrate to the bankruptcy judge that you will be   able to make your car payments.  This assumes that you have not already   included the car payment in schedule J expenses.

Phong Thanh Tran · Answer

When your monthly expenses exceed your income on schedule J, nothing really happens except it may raise the issue of how you will be able to pay any debts that you choose to reaffirm.

Deborah Stencel · Answer

If your expenses exceed your income, you may have trouble convincing the judge that you can afford to keep all of your secured debt but in terms of the bankruptcy itself that is how it should be.  Expenses should exceed income in most cases.

Theodore Araujo · Answer

That is almost one of the tests to determine IF you can file Chapter 7, but you are only allowed to list "allowable expenses" to offset your income.

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When filing a Chapter 7 bankruptcy schedule J, if your monthly debt exceeds your monthly income, what happens?

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