When you file for bankruptcy, you must give the court detailed information about your finances. On Schedule I: Your Income, you list all of your current monthly income. The bankruptcy trustee—whose job it is to find money for your creditors—will compare Schedule I to your expenses on Schedule J: Your Expenses. If you have extra income each month, the trustee might argue that you can pay something to your creditors and ask the court to convert your Chapter 7 case to a Chapter 13 case. Or, if you filed for Chapter 13 bankruptcy, the court might increase the monthly amount you must repay your creditors.
For more information about other bankruptcy forms, including where to get them, see our Bankruptcy Forms topic area.
Out of the five types of bankruptcy chapters, most people choose to file either a Chapter 7 or a Chapter 13 bankruptcy. Here are the main differences between the two.
Chapter 7 bankruptcy. Chapter 7 bankruptcy wipes out, or “discharges,” certain types of debt—such as credit card bills, medical bills, and personal loans—without requiring you to pay back anything to your creditors. You can keep a reasonable amount of property (as determined by your state). To qualify, your income must fall below your state’s median income for your household size.
Chapter 13 bankruptcy. If your income is too high to qualify for a Chapter 7 bankruptcy, or if you want to keep more property than your state allows, Chapter 13 bankruptcy can help reduce your monthly payments for three to five years. You pay your “discretionary income” (the amount left over after you pay for household expenses) to certain creditors, and, after successfully completing the repayment plan, the balances of your dischargeable debts are wiped out. To find out how to calculate discretionary income, see How to Complete Chapter 13 Calculation of Your Disposable Income (Form 122C-2). [LINK]
Schedule I tells the bankruptcy trustee about your current employment and income from all sources (including Social Security benefits). The income figures on Schedule I are different than the means test income figures used to qualify for Chapter 7 bankruptcy, or the figures used to determine how much disposable income you must pay your nonpriority unsecured creditors in Chapter 13 bankruptcy. So even if you pass the means test or if you have no disposable income under Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period (Form 122C-2), your answers on Schedule I and Schedule J might require you to pay something to your creditors.
Example 1. Sally was unemployed for most of 2015. In January of 2016, she got a new job and her income went up substantially. But her expenses didn’t change. When she filled out her bankruptcy paperwork, she used her prior six months’ worth of income on the means test (and qualified for a Chapter 7 bankruptcy easily), her current income on Schedule I, and her low, unchanged expenses on Schedule J. The bankruptcy trustee noticed she had $500 of extra income each month and argued that she could pay that amount to her creditors. The court agreed and converted her case from Chapter 7 to Chapter 13.
Example 2. Consider the same scenario discussed above with one exception—instead of filing for Chapter 7 bankruptcy, Sally filed for Chapter 13. Because of her prior unemployment status, Form 122C-1 indicated that she didn’t have any discretionary income to pay her nonpriority unsecured creditors. However, because Schedule I and J showed Sally had $500 extra each month, the Chapter 13 trustee argued that she had the ability to pay more than her proposed monthly plan payment of zero. The court agreed and required Sally to pay $500 per month for three years.
On Schedule I, you’ll list your employer’s name and address, the length of your employment, and your occupation. If you’re married, you must list your spouse’s information, as well—unless you are separated and not currently living together. You’ll also include the following for yourself and your spouse, if applicable:
At the end of the form, you’ll tell the court about any anticipated changes to your income likely to occur within the next year. This might include a yearly pay increase, a bonus, or a pay reduction due to a loss of work hours.
This article 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.