Ch. Schedule J (Illinois) - Attorney Nightmare

[PoorlyFunded]

I just filed today. Thank god. But my attorney "tweaked" my Schedule J for Chapter 7. And by "tweaked," I mean "What the actual hell is the trustee going to say about THIS?"

He calculated $991 for medical expenses. Now, I do have a treatment plan for $9,500 from February. I haven't started treatment, and I don't have dental insurance. I also don't have a schedule of visits or appointments. Literally just the treatment plan with all the procedures and prices. I need time to figure it out, and Chapter 7 was supposed to give me relief to do that. I REALLY don't think the trustee is going to accept that amount with that evidence, though; he's going to want a lot more.

He then left off my student loan payment, which I thought was supposed to be included on the schedule. I'm in forbearance right now, but I have to resume payments in July (well, as soon as the automatic stay is lifted).

Anyway, so all of this has put me UNDER by $400. My other expenses are perhaps a bit high ($440 for transportation - I drive 90 miles a day and have maintenance due).

What PISSES ME OFF is that he didn't bother to consult with me before altering it from what we had previously -- $100 over, a bit higher for medical/dental (about $300), and included my required student loan payment.

[justbroke]

You never know what the Trustee will accept. The problem is you really don't know if the United States Trustee (UST) is not going to accept that large expense of $991 on your Schedule J. It really just depends. I think your lawyer is arguing that if they argue about it he'll say it's for healthcare.

Also, your student loans don't go on Schedule J because the are unsecured (non-dischargeable) debt. So they don't like to count them as an expense. They have no special priority (as in priority unsecured debt).

[PoorlyFunded]

I mean, I'd like to see a trustee try to argue that I don't need pain-relieving root canal treatment and teeth in general. lol As for student loans: I always found that ridiculous. No, they're not secured, but they're also not dischargeable, so they SHOULD be considered the same as tax debt. Like, how on earth is a person supposed to create a realistic budget for Schedule J if they can't include something that HAS TO BE PAID? Ugh.

[justbroke]

Tax debt and student loan debt are two different categories of unsecured debt. Student loan debt will never be "priority" unsecured debt since it is not from the "public trust fund." In other words student loan debt does not run the government like taxes. Despite it being non-dischargeable it is just like any other general unsecured debt and will never be entitled to priority in the bankruptcy code. Priority is the name of the game and student loan debt is not a public trust fund debt entitled to priority.

The other reason escapes non-attorneys. The purpose of the Means Test and Schedule I/J is to determine your "disposable monthly income" (DMI) after accounting for "allowed" expenses. Student loans go into deferment during a bankruptcy so they are not a current obligation. Since there is no obligation to pay during the pendancy of a bankruptcy, even in a hypothetical Chapter 13, it is not an expense under Means Testing. If you were in a Chapter 13, you still wouldn't need to pay on student loan debt. You could, if you have sufficient DMI, have the Trustee make pro rata payments on the student loans during an actual Chapter 13.

As for arguing, yes I agree. You can argue and they can argue but it's not the Chapter 7 Trustee who will argue. It would be the United States Trustee with the argument. It the payments have been consistent over a period of time preceding the filing of the bankruptcy, it's an easier argument to make. In many cases neither the Chapter 7 Trustee nor the United States Trustee cares. I would say that only a few cases get more scrutiny on Schedule J and the Means Test and those are typically over-the-median income filers seeking a discharge under Chapter 7.

We have a couple here on BKForum that had to actually argue the same thing regarding future medical requirements, albeit in a Chapter 13. I personally believe it depends on the Trustee/UST and the particular circumstances.