If you hang around bankruptcy lawyers long enough, it won’t be long before you hear talk about “what’s on the I and J.”
This sort of inside baseball talk refers to Schedule I and Schedule J, on which debtors are required to list all their sources of income (on I), and all their household expenses (on J).
Both schedules are based on monthly estimates.
Their importance lies at the bottom of Schedule J, where expenses are subtracted from net income, and we find out if the debtor is operating in the black or not.
In Chapter 7 cases, one mistake lawyers make is not “spending” the client’s money on schedule J. If there is a large positive balance each month, the trustee is sure to suggest that the case be converted to chapter 13, so that amount can be used to pay a dividend to creditors each month.
On the other hand, if the case has been filed in Chapter 13 on purpose (e.g. to avoid a foreclosure), there had better be a positive amount left over each month, or else the case isn’t “feasible.” Or to state it another way, by the debtor’s own declaration, there isn’t any money to fund a plan.
So preparation of these forms requires not only accurate budgeting by debtors (occasionally something in short supply), but a good sense on the part of the attorney on what the goal of the case is going forward.
If you are filing a bankruptcy case, know which chapter you want to be in, and you’ll know how much the debtor can “spend” on Schedule J.
For viewable and printable copies of these schedules, click on the links below:
by Doug Beaton