Way, way back in 2005 when YouTube was just being born, another change to American culture took place that few of us noticed. Joe Biden spearheaded a new set of bankruptcy laws that made it more difficult for the average consumer to file for Chapter 7 bankruptcy.
The biggest change to come from this new set of laws is that your income is critical in determining whether or not you qualify for Chapter 7 bankruptcy. If your income is too high, it completely closes the door on Chapter 7.
Every Single Penny Counts
As a consequence of this 2005 change, calculating your exact income is extremely critical. If you made an appointment to see a bankruptcy attorney for the first time, he or she probably asked you to bring in a pile of pay stubs for you and your spouse. This is so your attorney can make a six month average calculation of your income. If you’re over the threshold, then you’ll likely have to file for Chapter 13 bankruptcy, or simply not file for bankruptcy at all.
When calculating your income, you can’t forget a single penny. Do you have a second job at Domino’s? Don’t forget it. Do you make a little bit of money selling items through your eBay business? Well that goes in there too.
And don’t forget about your child’s income either. Little Sally may be working a few hours a week at Taco Bell. If she’s your dependent, you’ve got to include her income too.
So I Forgot a Little… So What?
What happens if you forget to include income in your bankruptcy paperwork when you file? When the bankruptcy trustee inevitably discovers this extra income, your Chapter 7 bankruptcy could be dismissed for one of two reasons.
First, you failed to disclose a fact to the court, which can get you in trouble. Second, if this puts your income over the maximum threshold, then you no longer qualify for Chapter 7 bankruptcy. You will either have to convert your case to a Chapter 13 if the court allows it, or give up on the hopes of filing for Chapter 7 bankruptcy altogether.