11 Oct Planning for Bankruptcy – “I just got a bonus” – One of a Continuing Series
Under the Bankruptcy Code, we calculate your “current monthly income” to see if you qualify for a chapter 7 case. Those with “current monthly income” more than the median income are presumed to be abusing the bankruptcy system if they file a chapter 7. They can “overcome” this presumption in some cases through the complex and confusing “means test.”
Our first step, however, is to figure out your “current monthly income.” This means we must know what you earned over the past six months and then take the average of those months, multiply by 12 and see what your annual income looks like. If it is more than the amount earned by 50% of the people in your area, you are an “above-median income” earner. We ask you to give us your paystubs. We need to see exactly what you earned, whether regular income, bonus, overtime or anything else.
If your income over the past six months does not reflect what you are going to make in the not-too-distant future, it could be in your interest to wait awhile before you file. For example, if you received a bonus in January, it would not show up in the means test if you file in August.
Similarly, if your income is going down because of cut-backs in overtime, you may be better off waiting a few months until your “current income” reflects what you are actually going to make in the future.
You may feel like you are out of control. Let us help you gain control of your financial life.
Lakelaw represents people in personal and business bankruptcy cases in Illinois and Wisconsin.
Latest posts by Jay Fleischman, Esq. (see all)
- 5 Things You Need To Know About Bankruptcy Exemptions Before Your Case Is Filed - August 28, 2013
- Beware Of This Person When Trying To Wipe Out A Second Mortgage In Chapter 13 - August 26, 2013
- Our Best Tips For Filing For Bankruptcy Without Your Spouse - August 22, 2013
- 5 Ways To Celebrate Financial Literacy Month - March 31, 2013
- Burning Money With Handcuffs On - March 21, 2013