Bankruptcy Budget

The bankruptcy budget is used to calculate monthly disposable income to determine whether the debtor is capable of paying something to unsecured creditors.

How is the Budget Determined

When you file for Bankruptcy you will be required to file certain schedules. Among the schedules are Schedules I and J. Together, Schedules I and J make up the Budget. These Schedules are used to determine the debtor's monthly disposable income. Schedule I is where the debtor sets forth family income. The debtor's monthly income is determined by taking the Gross Income less payroll deductions including medical insurance, and payments to pension plans. Schedule J is where the debtor sets forth family expenses. The debtor's monthly expenses are determined by adding together all of the debtor's necessary monthly expenses. The payments for unsecured debt are not included in the expense list unless they are the payments of the non-filing spouse.

Once the Schedules are complete, your lawyer will calculate the debtor's Disposable Income by subtracting the total on Schedule J from the total on Schedule I. If the debtor's disposable income is very low the debtor may qualify for a Chapter 7. If the debtor's disposable income is high the debtor may be forced to file a Chapter 13 in order to pay unsecured creditors a portion of what is owed on the principle balance.