Submitted by Rachel R on Thu, 06/18/2015 - 2:12pm
Protecting future income is a priority when filing bankruptcy
Image Source: Flickr User Rocky Lubbers
If you are considering filing a Chapter 7 bankruptcy to get free of overwhelming debt, you should know that, in some cases, income that comes in after you file could be pursued by your Trustee. Here's what you need to know to best protect your income and get the most complete debt relief from your Chapter 7 bankruptcy filing.
How income is determined for a Chapter 7
While the Means Test for Chapter 7 looks at your current monthly income (CMI), how it is calculated is not quite as it seems it should be. CMI would be more aptly called “current monthly income as determined by averaging your last six months of income.” So to calculate your CMI, you have to look at the last six months of:
You add up the last six months of these sources of income then divide by six to get your current monthly income that may be more or less than what is actually your “current” monthly income. It may seem strange, but that's the how the law works.
When the Trustee comes for your money after the fact
Generally speaking, the last six months of money you earned immediately prior to filing bankruptcy is what matters. But if you get a lump sum of cash after you file bankruptcy, the Trustee assigned to your case may come after it. Here are some examples and what you can do to protect your money while still getting debt relief.
Timing is everything
Timing is critical when it comes to filing your bankruptcy. If you're trying to stop a foreclosure on your home, timing matters. And with your income, timing matters. You want your CMI to reflect most accurately your true earnings so that means if you had a one-time windfall that's not a regular occurrence, you might want to postpone filing until your income normalizes. You also want to ensure that you have an experienced and reputable bankruptcy attorney to handle your filing do that you get the best and most fair income under the rule of law.
Contact the law offices of John T Orcutt for a free consultation with a North Carolina bankruptcy expert. Call +1-919-646-2654 for an appointment in Greensboro, Raleigh, Wilson, Garner, Fayetteville or Wilson.
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