Author Topic: BK and income  (Read 1607 times)

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BK and income
« on: August 14, 2011 08:16:57 AM »
How does the 6month income rule work?  Is it previous 6 months from date petition is filed?  Or 6 months from meeting with creditors?

Also, what happens if you have an increase in income or decrease in expenses after petition is filed and are awaiting meeting with creditors or discharge?  Will court find out about that?

How long does it typically take for ch7?  Im in NYC


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Re: BK and income
« Reply #1 on: August 15, 2011 12:18:43 AM »
I'm a little confused.  If you meet the IRS requirements to be eligible for a Chapter 7 and your attorney has filed a stay, everything is based on the current information you submitted with your filing. 


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Re: BK and income
« Reply #2 on: August 15, 2011 12:52:21 AM »
Most BK attorney's will give you a free consultation.   These are routine questions that a BK attorney could answer with zero research. 

However, it is not going to be the six months after your meeting with the creditors.   No matter how solid of a job one might have, there is no way to guarantee income over the next six months. 

Also if it is a chapter 7 the case will be closed after the Judge signs the discharge papers.  You can win the powerball the next day and keep every dime. 

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Re: BK and income
« Reply #3 on: August 15, 2011 10:58:56 PM »
What one BK lawyer told me it is the six months prior to your filing. They advised not to file with tax time if you get a refund, bonus time if you get a bonus, well you get the point.

In the end (even though I get no bonuses and a tax bill instead of a refund) I would still be stuck in a 13. So I declined.
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Re: BK and income
« Reply #4 on: August 15, 2011 11:11:16 PM »
The six months income statements are usually prepared as part of the information provided to the trustee in preparation for the 341 meeting. Mine reflected income up to the BK filing date.

Re a tax refund: it depends on the trustee. I filed ch 7 beginning of 2/11, had the 341 meeting six weeks later. In my BK paperwork  I indicated that I would be getting a tax refund, and I also stated the approx. amount.

At the 341 meeting the trustee asked me about the refund, and what I had done with it (it was approx. 1k). I answered truthfully that I had used the money to pay my BK attorney the second half of his fees.

The trustee's response: 'Yes, that's how it goes.' And that was the end of it in my case.

Disclaimer: this reaction may not be typical.

The BK debt was discharged at the end of May - pretty much 60 days after the 341 hearing.

I tend to spend my life with wishful thinking, daydreaming, or with being naive beyond belief. Assume it's the same here in this forum.


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Re: BK and income
« Reply #5 on: November 23, 2011 07:38:06 PM »
Means Test Income = CMI = Currently Monthly Income = Income received in the 6 CALENDAR months prior to the CALENDAR month in which you file divided by 6; i.e., today is Nov. 23, if I file today my CMI equation would look like this: (total aggregate gross income from May 1 thru Oct 31) /6 = CMI

THIS DOES NOT CHANGE throughout your case!!  This is only used in the means test to determine whether a presumption of abuse arises when you file a chapter 7.  If your expenses or income change, then those changes can be the basis for the UST's action to object to the chapter 7 under 11 USC 707(b)(3) as abuse.  Though, I do not believe you are under any obligation under 11 USC 521 to amend your schedules for post-petition activity.

In a chapter 13 it is used to determine whether you are committing all your disposable monthly income to the plan.  However considering SCOTUS's 2010 decision in In re Lanning, if you expenses change or your income changes, those changes can be  considered when determining whether you are committing all your disposable monthly income to the plan.