21 Aug Do I Have to Reveal My Expected Year End Bonus?
A Florida bankruptcy judge recently ruled that a debtor’s projected disposable income must include his annual bonus when there is evidence that the bonus is likely to be paid.
In the Arsenault case, the debtor filed more than six months after he received his December bonus and therefore did not include it in his B22 Means test calculation. The bonus was not included in the Schedule I budget form either.
The trustee deduced the existence of the bonus by looking at the debtor’s tax returns and by looking at the debtor’s income disclosure on the Statement of Financial Affairs. When questioned at the 341 hearing the debtor testified that, yes, he did receive a $23,000 bonus in 2006 and a $17,000 bonus in 2005.
The bankruptcy judge overruled the debtor’s objection that the bonus was not guaranteed money and should not be included in the budget. Because there was historical precedent for the payment of a bonus, it needed to be included in the Chapter 13 budget.
If I was facing this type of situation, I would draft a step plan that provided for a lump sum payment in December of each year while the plan was active. I would also try to work out some sort of reporting agreement with the trustee so that I would not have to file an amended budget every year.
If you have received bonuses in the past, you should reveal this information to your lawyer so that your lawyer can decide on the appropriate strategy for how to deal with this information in your bankruptcy paperwork.
Jonathan Ginsberg, Esq.
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