A question about income prior to and immediately after filing:

[cupcake]

The median income in my state is around $43,000. My current income is slightly above that but I am easily able to lower it for the full six months prior to filing. My question is whether or not it needs to stay lower until the discharge or can it go back up right after I file?

Thanks!

[southernbelle]

That sounds like a good question for an atty, but my opinion is, if you are filing chapter 7 and your income for the 6 mos prior to filing is below the state median and you qualify for a chapter 7 with little or no excessive disposable income from Schedules I and J, you should be okay prior to filing. After the 341 it seems as if your income might not be an issue because the objective of chapter 7 is to take a "snapshot" of your financial situation the day you file with a minimum 6 month look back prior to filing.


If there are no problems with the Trustees, ideally you won't have to provide additional information after the 341 with respect to income, but I've read on this Forum when the occasional filer was required to provide bank statements for the period after filing as well. Why, I don't know because I thought the day you filed was the cut off, but that's not necessarily always the case. If your income increases dramatically before the 341, you might have to answer for the increase at the 341 meeting by the local trustee.

Be careful how much your income increases also. if we are talking about a hundred dollars a month more, you might be okay in any case, but if we are talking about several hundred dollars after taxes, you might have a problem if they decide to look further into your finances.

[Help!]

If the income increase occurs after your 341 is concluded that's fine. If it goes up prior to your 341 hearing, you have to amend Schedules I and J. If you're getting a raise and there's nothing you can do to delay it, you might consider increasing your withholding to offset the income increase. If this was questioned, you could explain that this raise will increase your income tax liability for 2008 and you don't want to end up owing the IRS next spring.

Of course, I'm assuming the income increase is due to a raise. I definitely would not recommend "tweaking" your income on your BK petition, especially if you are near the median.

[laurannm]

I don't think you necessarily have to amend your schedules I & J if your income increases before the 341, particularly if the increase is small\cost of living. Your schedules are supposed to reflect your current income at the time of filing, and there is a specific line on the Schedule I that asks for reasonable changes in income expected to occur in the year following the date of filing. I would think the OP would note the expected increase in income here

[Help!]

Although there is nothing that says you must amend those schedules, the case trustee in our district asked every filer "Has your income changed since filing?" and if the answer was "yes", he said, "Have you amended your petition?"... followed by a stern "Why not?".

Depends on the trustee I guess, but I believe in playing it safe.

[laurannm]

Although there is nothing that says you must amend those schedules, the case trustee in our district asked every filer "Has your income changed since filing?" and if the answer was "yes", he said, "Have you amended your petition?"... followed by a stern "Why not?".

Depends on the trustee I guess, but I believe in playing it safe.

Good info to know...I'll have to run that by my lawyer as to a proper response in case we are asked.

I have seen some cases in our district on which people noted expected raises but did not amend their schedules, so you are correct, proper procedure may vary between districts

[danaf]

my trustee wanted my bank statements before filing and directly afterwards - so that should answer your question.