How to list your car payment on your Schedule J if you're not keeping the car

Chapter 7 bankruptcy is a great way to get out of a car loan that is way too expensive - either because of the monthly payment amount or because the loan balance is much higher than the car's value. But, many folks who surrender their vehicle as part of their bankruptcy know they will 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 schedules. If you're thinking your next car will have a payment that is 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 will be lower and you shouldn't list your current car payment. After all, you don't expect that you'll be paying that much per month going forward. Instead, take a look at what you can afford before getting into a new car loan and list your expected car payment as an expense on your Schedule J.

Not including an estimated car payment in your expenses will not give the court an accurate picture of what your budget is going to be for the next 12 months or so. It may also make it look as though you have money to put into savings at the end of the month even though you really don’t.