How to Complete Bankruptcy Schedule G: Executory Contracts and Unexpired Leases
On Schedule G: Executory Contracts and Unexpired Leases, you list your executory contracts and unexpired leases.
When you complete your Chapter 7 or Chapter 13 bankruptcy paperwork, you must complete a packet of forms. On Schedule G: Executory Contracts and Unexpired Leases, you’ll list any contract or lease you’re a part of when you file your bankruptcy case, such as a gym membership or car lease. If the contract or lease is valuable, the trustee might sell it and distribute the money to your creditors.
What Is an Executory Contract?
Most people regularly enter into contracts. While some are over quickly, others take longer to complete. An “executory” contract—which is a contract that you’re still responsible to perform under when you file for bankruptcy—often falls into the second category.
For example, purchasing a smoothie from the local juice bar takes little time. Once you tell the cashier what flavor you want, hand over the money, and accept the fruity beverage, the contractual transaction is over. Because you aren’t obligated to do anything further, you won’t list it on Schedule G. It’s not an executory contract.
An executory contract is more likely to take place over time. Say you agreed to pay a monthly fee to a health club. In exchange, you received use of the workout facility for a year. But after six months, you filed bankruptcy. Because you and the gym were obligated to do business with each other when you filed your case, the gym membership is an executory contract that you’ll list on Schedule G.
On the other hand, if your membership expired two months beforehand, you wouldn’t list it on Schedule G. It’d just be an old, expired contract—not an executory contract—even if you still owed the gym money. Instead, you’d list the debt on Schedule E/F: Creditors Who Have Unsecured Claims.
Common examples of executory contracts include:
- cellphone agreements
- tanning salon memberships
- country club memberships
- franchise agreements
- business contracts
- contracts to buy or sell property that’s still in escrow, and
- supply agreements.
What Is an Unexpired Lease?
When you lease property—such as a car, wood chipper, or house—you agree to pay for its use for a certain amount of time. When that time is over, you give the property back. A lease is unexpired if the lease period and terms are still in effect and you still have the right to use the property. Common examples of leases include:
- automobile leases
- residential or commercial real property leases and rental agreements, and
- leases for personal property such as equipment or other tools of trade.
What Is the Purpose of Schedule G?
When you file for bankruptcy, all of your property becomes part of the bankruptcy estate. It’s the job of the bankruptcy trustee to look through your bankruptcy petition to find property that can be sold, or transactions that can be unwound, for the benefit of your creditors. And executory contracts and leases can be very valuable—although they usually aren’t.
For example, if you’re a member of a highly sought after country club in a prestigious area, the trustee might be able to sell your membership and distribute the proceeds to your creditors. Or, if you leased a beachfront store at a great price, the trustee might be able to assign your lease to another business at a profit. However, most leases and executory contracts aren’t of value to the bankruptcy estate so you’ll likely be able to keep it.
How to Complete Schedule G
The self-explanatory instructions on Schedule G are easy to follow. You’ll check the box marked “No” if you don’t have any executory contracts or unexpired leases. Otherwise, you’ll check “Yes” and supply the following information:
- the name and address of the person or company holding the lease or contract, and
- the nature of the contract or lease (what it’s for).
If you’re filing for Chapter 7 bankruptcy and you want to keep an unexpired personal property lease (such as a car or equipment), you’ll state your intent on the Statement of Intention for Individuals Filing Under Chapter 7. You aren’t required to make disclosures about executory contracts or unexpired leases involving real property, such as your apartment, on the statement of intention form.
This article is provides general information only. When filing for bankruptcy, you must understand the federal and state laws governing the entire bankruptcy process. Failing to adequately research and understand how these laws might affect your case could result in unexpected consequences. If you aren’t familiar with the process, it's best to consult with an experienced bankruptcy attorney, or, use a do-it-yourself book like Nolo's How to File for Chapter 7 Bankruptcy.