Chapter 7 bankruptcy is a great way to get out of a car loan that’s way too expensive. This could mean your monthly payment is too high or your car loan balance is much higher than the car's value. But many folks who surrender their vehicle as part of their bankruptcy know they’ll have a car payment again in the near future because, well, they'll need a car.
If that's you, then you'll want to make sure that you budget for that car payment in your expense schedule. If you're thinking your next car will have a payment that’s similar to your current payment, you can list your current car payment as a baseline amount on your Schedule J.
If you're surrendering your car because the payment itself is too high for you, your new car payment should be lower, so don’t list your current car payment. Instead, take a look at what you can afford to pay on a new car loan, and list your expected car payment as an expense on your Schedule J.
It’s important to include an estimated car payment in your expenses on Schedule J, so the court gets an accurate picture of what your budget will be for the next 12 months or so. Not listing a car payment even though you intend to have one can also make it look like you have money to put into savings at the end of the month even though you really don’t.