A Quick Guide to Bankruptcy Schedules

If you are navigating the bankruptcy process, you have likely heard multiple people refer to bankruptcy schedules. Overwhelmed debtors are often confused about exactly what role schedules play in their bankruptcy process. Schedules are the primary forms that debtors rely on to provide their financial details, which play a vital role in navigating the bankruptcy process. These schedules, as well as statements about a person’s finances, are intended to provide the courts with every necessary detail about a person’s financial condition. 

Regardless of the details associated with your bankruptcy, it is critical to provide a complete and accurate bankruptcy schedule. This is true whether the entity filing for bankruptcy is a person or business. Since the end of December 2015, new bankruptcy schedules became effective for all entities filing for bankruptcy. To provide you with a better understanding of the role that bankruptcy schedules play, the following reviews the essential basic information about these forms.

Bankruptcy Schedules A and B: Property

These schedules address issues associated with the debtor’s property interest that are relevant to bankruptcy. This includes not just real estate, but all other types of property interests, as well. Consequently, not only must a debtor list any ownership of real property or real estate, but also things like vehicles, personal items, and household items. 

While describing property interests, a person must describe any business-related assets, financial property, and farm or commercial fishing-related interest. While a person will list the property, additional details also are required including the nature of the property, whether you share the property interest with anyone else, and the current value of the property.

Bankruptcy Schedule C: Exemptions

After the somewhat stressful process of listing all of a person’s property in schedule A/B, Schedule C is provided so a person can list all of the property that is exempt from bankruptcy. This means that the debtor will likely be able to keep Schedule C assets, and they will be unavailable to creditors. With each state deciding what property debtors can keep, California allows individuals to decide between two different exemptions. Debtors with substantial home equity often prefer System 1, while System 2 is more advantageous to debtors who have valuable property besides home equity. 

Deciding between System 1 and 2 can have a substantial impact on a person’s ability to keep certain types of property. It is also critical that exemptions are properly utilized because improper usage can lead to a debtor being forced to turn over assets as part of Chapter 7 bankruptcy to be liquidated. Making this type of mistake during Chapter 13 bankruptcy can result in a debtor being required to participate in a repayment plan with much more onerous repayment terms.

Bankruptcy Schedule D: Secured Claims

This schedule asks debtors to list all secured creditors. The concept of a “secured creditor” refers to an entity that has a fixed or floating security interest over an asset. Two of the most common types of secured creditors are mortgagees and vehicle lenders. Certain types of taxes including many associated with real estate are also classified as secured claims. Furthermore, a creditor with a judgment against a person also holds a secured claim in which the judgment functions as an automatic lien on all real property that the judgment owns. Failing to disclose a secured claim in Schedule D can result in a debtor being prevented from receiving a bankruptcy discharge. 

Many times, liens survive bankruptcy cases even if a debtor does everything appropriately and a bankruptcy discharge is granted. The best bankruptcy lawyers can work with debtors to create powerful tactics for handling secured claims.

Bankruptcy Schedule E/F – Unsecured Claims

This schedule combines both priority claims as well as general unsecured claims against a debtor. The Bankruptcy Code grants priority to certain types of unsecured claims. An unsecured claim refers to a debt that is not secured by property, while priority unsecured debts receive special treatment and are paid before nonpriority unsecured debts. 

The purpose behind priority debts is to protect special types of creditors, which can include domestic support obligations, child custody obligations, and wage claims. While this schedule combines priority and unsecured claims, debtors must list priority claims in a separate part of the schedule.

Bankruptcy Schedule G: Executory Contracts and Unexpired Leases

In this form, debtors must provide details about all “executory” contracts and unexpired leases. Many people who have begun to experience the bankruptcy are uncertain about what “executory contracts” are. These contracts refer to agreements that have neither expired nor terminated and which still require substantial performance from both parties. Executor contracts are best viewed as binding, living legal agreements. 

Many times, people beginning the bankruptcy process face uncertainty about whether to assume or reject executory contracts as they begin to take control of their finances. A knowledgeable attorney can provide you with a better understanding of how to conform to these contracts.

Bankruptcy Schedule H: Codebtors

A “codebtor” refers to people or entities who are also liable for any debts that a person has. It is critical to list codebtors on Schedule H by name as well as provide details about the person’s address and other distinguishing information. One reason why it is critical to list codebtors is that their financial situation can be substantially impacted if you end up receiving such a bankruptcy discharge. A bankruptcy lawyer can provide you with a better understanding of how a bankruptcy discharge will impact codebtors.

Bankruptcy Schedule I: Income

Regardless of its source, debtors must list any income sources on Schedule I. Income details are critical, and when measured against the means test, they can substantially influence a person’s qualification for relief under Chapter 7. Only debtors with a regular source of income can qualify for Chapter 13 bankruptcy. Schedule I is extensive and seeks several details about incomes besides source. 

If a person is filing for bankruptcy, but his or her spouse is not, details about the spouse’s income must also be listed. This requirement is excluded if a married couple is living separate and apart. A bankruptcy attorney can help make sure that you list all income sources as well as provide you with a better idea about bankruptcy will impact a non-filing spouse.

Bankruptcy Schedule J: Expenses

Debtors use Schedule J to list most expenses. Not only does the form request this information, calculating monthly expenses is a critical exercise for people filing for bankruptcy because this provides valuable details to all of the parties involved in the process. Creating a specific “monthly net income” provides debtors with a good idea about what their monthly cash flow looks like. Schedule J is also valuable because this form can help debtors filing for Chapter 13 bankruptcy determine if they can create a Chapter 13 repayment plan that is reasonable and consequently one that can likely be satisfied. 

When combined with Scheduled I, the two forms provide debtors with the same details involved in the means test, which is used to determine if a person is eligible to file for Chapter 7 bankruptcy. One critical difference between these two tools, however, is that the means test examines the last six months of a person’s life while Schedule I is focused on a more immediate time frame.

Schedules can be Amended While a Case is Pending

Given the many details involved in these bankruptcy schedules, people sometimes mistakenly leave vital details off the schedule. Provided that a person made a genuine error, it is often possible to amend bankruptcy schedules provided a case is still open and no discharge has been issued. In the case of these errors, it is critical to amend your bankruptcy schedules as quickly as possible. 

The reason for this urgency is that in Chapter 7 bankruptcy, debts might not be discharged if a person waits to revise a schedule. Making this type of error during Chapter 13 bankruptcy can mean that a debt does not end up being paid through a repayment plan.

Avoid Moving Assets

While filling out bankruptcy schedules and providing information about what you own, some people experience the temptation to sell, transfer, or hide assets before beginning the bankruptcy process. Even if you fear losing an asset, avoid this type of behavior at all costs. If a court determines that you were attempting to conceal assets, you can end up having your bankruptcy discharge denied. You can also find yourself in an even worse situation and be met with criminal penalties and additional fines. 

The potential advantage of hiding assets is never worth the associated risks. This type of behavior should also be distinguished from people who sell assets shortly before deciding to file for bankruptcy to pay for essentials like mortgage and food. This type of behavior is understandable, but you should make sure to address it on bankruptcy schedules.

Speak with a Knowledgeable Bankruptcy Attorney Today

Disclosing details about a person’s income, expenses, and other financial details is critical to the bankruptcy process, and bankruptcy schedules were created to make it easier to share this information. If you have any questions or concerns about a bankruptcy schedule, an experienced attorney can help. Contact attorney Melanie Tavare to schedule a free case evaluation.