Preheat oven to 350°F. Toss bread cubes with melted butter. Divide between 2 baking sheets and bake for 10 minutes, or until they are toasted lightly. Let the cubes cool.

Make custard by whisking together milk, eggs, Peach Schnapps, vanilla extract and ?½ cup sugar. Pour over bread cubes, stir lightly and set aside.

In another bowl, gently toss peaches, remaining 1 cup sugar, cinnamon and the nutmeg. Combine the bread custard with the peach mixture. Melt butter in casserole dish in the oven. Take dish out, turn bread pudding batter into dish and return to oven to bake for 50 to 60 minutes. Insert toothpick to make sure custard is completely baked.

Serve warm or cold with whipped cream.