Continuing with our series on bankruptcy schedules, today we look at Schedule I, which is used to provide information about your income. This form provides a variety of purposes in bankruptcy cases – depending on the chapter under which the case was filed. Typically, Schedule I is analyzed in conjunction with Schedule J, which is the schedule related to a debtor’s expenses. But because of the importance of each of these schedules, they will be the subject of separate blogs.

In a chapter 7 case, Schedule I helps the bankruptcy trustee determine your ability to repay your debts. In order to qualify as a chapter 7 debtor, most debtors must have income in an amount less than the mean income for similarly situated people (i.e., those with the same number of dependents) in the area in which they live. If a debtor’s income is less than the mean, then there is no presumption of abuse, and that debtor can proceed under chapter 7. If a debtor has income above the mean, then a second level of analysis looks more closely at the types of debts that the debtor has, and based on that analysis, it may be found that there is no presumption of abuse despite the slightly higher income. Finally, if the debtor has above-mean income and cannot satisfy the 2nd level of analysis, then a presumption of abuse arises that the debtor has not filed chapter 7 in good faith. This is a rebuttable presumption that a debtor would have to rebut with evidence explaining to the bankruptcy court why, despite the above-mean income, that the case is not an abuse. Certain exceptions to the Means Test exist, such as a situation where the majority of the debtor’s debts are considered business debts. Ultimately, if a debtor is unable to overcome the presumption of abuse, then the only bankruptcy option is to instead file for chapter 13, which involves at least some payment to the debtor’s creditors.

In a Chapter 13 case, Schedule I, in conjunction with Schedule J (related to a debtor’s expenses) is used to determine how much a debtor is able to pay under a chapter 13 repayment plan. Ultimately, in order to be able to confirm a chapter 13 plan, a debtor must be able to pay at least the amount of their “disposable income,” as determined by schedules I and J. As a result, Schedule I takes on additional importance in a chapter 13 case.

Step 1: Gather Information About Your Income
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