Frequently while going over a client’s monthly income, I discover the client has stated their monthly income as less than what it really is due to the way they calculate their paychecks. Unfortunately, for many of my clients, the difference between the two calculations can cause them to not have enough income to qualify for a Chapter 13 to save their home or car.
Let me explain. Say you are paid twice a month and your net income (the amount you bring home) each pay period is $1000.00. That means you are bringing home $2,000.00 per month. However, if your net paycheck is $1,000.00 every two weeks, then your monthly income is $2,166.66 per month. Why the difference? People who are paid twice a month receive 24 pay checks a year. People are paid every two weeks receive 26 pay checks per year.