Schedules I and J: income and expenses that hold up to scrutiny

Schedule I (Official Form 106I) reports household income as it stands on the filing date. Schedule J (Form 106J) reports household expenses as the debtor reasonably projects them going forward. Subtract one from the other and you have monthly net income — the number that tells a Chapter 13 trustee whether a plan is feasible, and a Chapter 7 trustee whether a case that passed the means test still belongs in Chapter 7.

The essential point is that these schedules are not the means test and are not supposed to match it. Form 122A-1 computes a backward-looking six-month average of gross income under a definition that excludes certain benefits; Schedule I is a present-tense snapshot of everything the household actually receives. The two will differ in most real cases. What draws trustee attention is not the difference — it is a difference nobody can explain.

What Schedule I asks for

Schedule I opens with employment details for Debtor 1 and for Debtor 2 or a non-filing spouse. A married debtor filing alone whose spouse lives in the household reports that spouse’s income here; a debtor who is separated and living apart does not. That single instruction accounts for a great many amended schedules.

The income section runs gross to net in a fixed order: gross wages, salary, and commissions before any deduction; estimated overtime; itemized deductions for tax, Social Security and Medicare, retirement contributions and loan repayments, insurance, domestic support obligations, and union dues; and finally take-home pay. Below that sits the non-wage block — net rental and business income, interest and dividends, family support received, unemployment compensation, Social Security, other government assistance, pension income, and a catch-all. The form then asks whether income is expected to rise or fall within the year after filing, a question answered too often with a reflexive “no” where a seasonal layoff or a scheduled raise is entirely predictable.

Two traps recur. Gross means gross: keying take-home pay into the wage line and then also listing the payroll deductions double-counts the withholding. And Social Security belongs on Schedule I even though §101(10A) excludes it from current monthly income — firms building Schedule I from the means test worksheet routinely drop it, producing a household whose income cannot support its expenses.

What Schedule J asks for

Schedule J begins with the household — each dependent, their relationship and age, whether they live with the debtor, and whether the expenses cover anyone else. Where a spouse maintains a separate household, Form 106J-2 covers that second budget.

The expense section is itemized, and its ordering matters. The residence line captures the first mortgage payment or rent including ground or lot rent, with separate sub-lines for real estate taxes, property insurance, maintenance, and association dues if they are not already included in that payment — a structure built to prevent both double-counting and silent omission. Additional mortgages get their own line, and mortgages on other real property appear near the end. Utilities, food, childcare and education, clothing, personal care, medical, transportation, entertainment, charitable contributions, and insurance and taxes not deducted from pay each get a line. Vehicle loan and lease payments belong on the installment payments line, not in transportation, which covers fuel, maintenance, and fares only.

Schedule J calls for actual, reasonable, projected expenses. It is not Form 122A-2, and a Schedule J reproducing the IRS National and Local Standards line for line is a tell that nobody asked the client what they spend. Build it from the client’s own bank statements and bills.

Why Schedule I and the means test legitimately differ

The working rule is simple: whenever Schedule I and the means test disagree by a meaningful margin, write down why, in the file, before filing. Trustees ask at nearly every 341 meeting where the gap is visible, and “I would have to check” is a worse answer than “his overtime ended in March — the paystubs are in the packet.”

What trustees flag

• Net income of zero, or a dollar or two. Real households do not balance to the penny; a bottom line sitting exactly at zero reads as expenses worked backward from a desired result.
• Round numbers throughout. A few figures ending in 0 or 5 are normal; twenty of them signal estimation rather than measurement.
• Secured debt on Schedule D with no matching expense on J — or a car payment on J with no creditor on D, which usually means a creditor was missed entirely.
• Retirement contributions and plan loan repayments in a Chapter 13. Courts differ on whether voluntary contributions may be deducted from disposable income, and a retirement loan paid off mid-plan draws a request for a step-up.
• Expenses for people who are not in the household section, without any corresponding contribution on Schedule I — or a household size that differs between Schedule J and the means test.
• Self-employed debtors with no tax line. No withholding on I and no tax expense on J means the debtor is either overstating net income or about to accrue a priority tax debt.

Chapter 13 feasibility

In a Chapter 13, Schedule I minus Schedule J is the debtor’s stated capacity to fund the plan, and §1325(a)(6) requires a finding that the debtor will be able to make all payments and comply with the plan. If net income is below the proposed payment the plan is not confirmable on its face; if it exceeds the payment comfortably, expect the trustee to ask why the payment is not higher.

For above-median debtors the disposable income floor comes from the 122C series, but these schedules still matter, because the statutory phrase is projected disposable income and courts may account for changes known or virtually certain at confirmation rather than mechanically extending a historical average. The applicable commitment period — three years for below-median debtors, not less than five for above-median debtors under §1325(b)(4) — sets how long that capacity must hold, and because plan payments begin within 30 days of filing under §1326(a)(1), a budget that only works on paper fails quickly.

Documenting the numbers

Both schedules should reconcile to source documents already in the file: the sixty days of payment advices §521(a)(1)(B)(iv) requires the debtor to produce, the most recent federal tax return §521(e)(2)(A) requires be delivered to the trustee at least seven days before the date first set for the 341 meeting, and several months of bank statements — the only honest basis for Schedule J. Our document checklist covers the full request list.

The verification step that catches the most problems is also the dullest: read the drafted figures back against the paystubs and statements they came from, not against the intake worksheet they were transcribed onto. Transcription errors survive every internal-consistency check the software runs, because the arithmetic is right and only the inputs are wrong — the failure mode described in petition data entry errors.

This guide is general information for law-firm staff, not legal advice for any particular case.