In the world of bankruptcy, your income is actually the average of what you have made for the last six months, when it comes to figuring out the means test or claiming your income for purposes of determining how much disposable income you have in a Chapter 13 plan. This income calculation can differ slightly from the income that goes onto the schedules that you have to file along with your bankruptcy petition.
Income does not only mean wages or salary from your current job. Depending on your situation, it can also include income from side jobs or businesses, rental income, tips, bonuses, unemployment compensation, dividends, royalties, income of other members of your household, pensions, retirement income, and on and on. If your income has changed in the last 6 months, this will also throw a wrench into it.
Don't drive yourself crazy determining your income for bankruptcy.
Sound confusing? Yes, it is. Your bankruptcy trustee will be reviewing not only what is listed in all of your bankruptcy paperwork, but also your paystubs, tax returns, and possibly your bank statements to make sure that everything has been correctly reported in the right places. If there are discrepancies or errors, even innocent ones, your bankruptcy case could be in serious trouble. Your financial future is far too important to try to figure this out yourself (even if you are very smart), which is one of the many reasons that most people are far better off spending the money to hire a bankruptcy lawyer to navigate all of the complexities of bankruptcy laws. Not only do you put your bankruptcy at risk if you get it wrong, but correctly calculating your income can make the difference about which kind of bankruptcy you should be filing for.
Not ready to speak to a bankruptcy lawyer yet? No problem- request our free book and when you are ready, we are here to help you determine if bankruptcy is even the right solution for you.