Proper Income Disclosures in Bankruptcy

Submitted by Jen Jones on Wed, 09/01/2010 - 12:07pm

Proper Income Disclosures in Bankruptcy

In an era of meteoric unemployment rates, looming layoffs and job uncertainty, income can be a tough thing to talk about these days.

But for those men and women seeking the priceless protections of a bankruptcy—many for the same unfortunate economic reasons listed above—talking about income is at the very core of a successful bankruptcy filing.

Under current bankruptcy law, debtors just like you who are seeking bankruptcy must complete what is known as a Statement of Financial Affairs. On it, you are asked to disclose all earned income: from average employment pay to profits from the operation of a business. In addition, you must also share any income coming from other sources.

To clarify all of the sources that must be disclosed to the bankruptcy court, here’s what you should keep in mind when filling out your personal Statement of Financial Affairs to better assure an informed and effective bankruptcy:

Three Year’s Worth of Income
When considering a comprehensive disclosure for the purposes of your Statement of Financial Affairs, keep in mind you must reveal all income received during the year of your bankruptcy filing, as well as all income accrued two years prior to your bankruptcy filing. In this situation, if you were to file for bankruptcy this month (September 2010), in addition to providing income information for 2010, you would also need to share your earnings for the years of 2009 and 2008. In come can be proven by providing your tax returns, or what’s known as a profit and loss statement for those who are self-employed or own their own business.

The non-filing spouse's income
If filing jointly with your spouse, both of your incomes will be included when determining your eligibility. If your spouse is not filing, you will probably need to provide some information about the non-filing spouse's income. This is to make sure that your spouse's contribution to the household, if any, is included in the total monthly income. If your spouse keeps his/her finances completely separate, it will be necessary to know exactly how much of the household expenses the spouse pays separately for items like mortgage payments, utilities, groceries, etc. Don't let this easy requirement deter you. Even if you keep your finances completely separate, your attorney should be able to help you make a determination your spouse's contribution.

Social Security and Child Support Payments
Income in the traditional sense isn’t the only “income” necessary for the purposes of the Statement of Financial Affairs. In addition, you must also include all income—even amounts that would normally be considered exempt for the purposes of your bankruptcy. For example, you must disclose Social Security and child support payments, as well as   any cash or income considered “under the table” for the purposes of traditional personal income. In short, all incoming money should be considered fair game when consulting with your attorney about your personal bankruptcy filing’s Statement of Financial Affairs.

As a result of the intricacies of a Chapter 7, 11, or 13 bankruptcy—especially in a case where there are multiple parties’ incomes at issue—it is essential to consult with a qualified bankruptcy attorney. Your bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests during the duration of your bankruptcy. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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