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Bankruptcy Filing And Your Income

Bankruptcy Filing And Your Income
"""Too many clients and prospective clients have consulted with a bankruptcy counsel about declaring bankruptcy, and they have insisted that they have no income. They actually meant that they were not earning as much money as they would like when questioned. Or they meant that their gross income was insufficient to cover their minimum monthly obligations. Alternatively, their net income was zero or near to zero.

For non-humans, such as lawyers and bankruptcy trustees, these concepts are false and incorrect, despite their clarity and veracity for normal humans. According to a professional, the only individuals without income are the destitute. They are not the individuals who are registering for bankruptcy.

There are a variety of definitions of income for purposes of bankruptcy. It can include: (1) wages earned by an employee; (2) wages earned by a self-employed individual or independent contractor; (3) money given to the debtor by family and/or friends; (4) money loaned to the debtor by family and/or friends; (5) unemployment compensation; (6) pensions or retirement; (7) VA income regardless of designation; (8) Social Security.

In Chapter 7 bankruptcy proceedings, ""Current Monthly Income"" is defined in two distinct ways. First, for Schedule I, the last two months of income are considered. In contrast, for Form B22A (also known as the Means Test), this is the average of the previous six months. Typically, these two forms generate distinct monthly income amounts. This is to be expected, and it does not indicate a problem on its own.

Due to 2005 modifications to the bankruptcy code, all debtors must now provide proof of income. Only written documents produced by independent third parties are recognized as proof of income. Typically, these are pay slips from employers, bank statements, or unemployment compensation pay advices.

Additionally, the debtor never utilizes his income for the month in which he files for bankruptcy. This is best conveyed by way of illustration. Suppose a debtor declares bankruptcy in July. It does not matter which July day it is. Therefore, for Schedule I, the income months would be May and June. The Means Test, however, will use income from January through June.

The logic is easy. The bankruptcy attorney adds the gross income for each month and then divides by two or six, depending on the situation. For purposes of Schedule I, deductions are enumerated with their average monthly amounts.

If the debtor also owns and operates a business, the attorney will detail the average business income and expenses on Schedule I. In addition, Schedule I details the typical family expenses. Some of the deductions and expenses listed on Schedule I are used in the Means Test. In addition, the Means Test allows for its own expenses and deductions. There is a deduction for pagers but not for mobile phones, as an example.

In conclusion, bankruptcy laws and forms, as well as a debtor's income amount, are not immediately simple and straightforward to comprehend. It is recommended to have a bankruptcy attorney advise and prepare you for filing bankruptcy, for better or worse.""

" - https://www.affordablecebu.com/

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"Bankruptcy Filing And Your Income" was written by Mary under the Finance / Wealth category. It has been read 68 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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