The bankruptcy process is heavily rule governed, meaning it has many strict guidelines that it adheres to for managing cases. While these guidelines are meant to protect both the system and the consumer, the regulations it imposes are important for how your case could be handled in the court.
When you file for bankruptcy you will be required to complete a petition. This document provides a detailed outline of your financial standing, including descriptions of your income, fund accounts, assets and debts. While your debts are the item of importance in terms of finding resolution, your income plays a significant role in the process.
First, it isn’t just the wages you earn at work that qualify as income in your filing. In some cases, funds from an inheritance, tax return or profits from a sale can all be considered income in your filing. Generally, retirement funds, insurance dividends and benefit checks are exempt from becoming part of your case.
Second, your income is used to determine your overall eligibility to file for bankruptcy. A means test will be conducted to evaluate whether your disposable income is sufficient enough to warrant debt repayment under a Chapter 13 plan, or if your income level warrants eligibility for a Chapter 7 filing.
Last, changes to your income level, fund accounts or assets could influence the remainder of your case. For example, an increase in income could result in a higher monthly payment amount in a Chapter 13 plan, or could disqualify you from Chapter 7 eligibility. A decrease in income could result in a lower Chapter 13 payment, or possibly allow you to qualify you for Chapter 7.
It is important that you report any changes in your income, assets or fund account to your Dayton bankruptcy lawyer, as well as the court handling your case.