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How should I calculate my net income from bankruptcy point of view and what will be my debt-to-income ratio?

Key West, FL |

I am self-employed and my gross income from doing odd jobs is 14,000 p.a. and I file it as 1099. After deducting gas, utilities, tools rental, etc, my take-home or net income is 4,000 p.a. My step-son is on disability @ 750 a month and my long-term jobless wife (who has been unsuccessful in getting disability despite trying 3 times) is on food stamps by herself alongwith her son. We live in a rented house. My unsecured debt is 40,000. What income should I disclose to bankruptcy and how will my debt-to-income ratio be calculated?

Attorney Answers 5


  1. Disclose all the income. If you are filing chapter 7 bankruptcy, the court will be looking at what you have left over after paying your living expenses, not your debt to income ratio. The article below should explain this more thoroughly. Hope this perspective helps!


  2. Based upon what you put in your question, you will have no problem qualifying for a Chapter 7. There is no debt/income ratio calculation. As with all information requested in the bankruptcy filing, disclose everything. Never trade a debt for a felony!

    Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.


  3. You should not have a problem filing a Chapter 7. The form on the Means Test for businesses and self employed: gross; the deduct expenses for the monthly income. But even before such an excercise $14,000 and even if you have put your step-son's $750 per month you are well below the Means Test level. Disclose all income.


  4. Your income must be disclosed on both the means test and on Schedule I. By "income" I mean all income..never hide anything. You only care about two things when you file: Can you keep everything you own and can you discharge all your debts! However, there are other issues that can affect what you do before you file, and whether you should file now or wait longer to file. As a result, go to an experienced attorney who has practiced bankruptcy for a number of years and only practices bankruptcy..it is usually free and you will know the answers to the above questions! As others stated "debt-to income ration" is not something that exists in bankruptcy..you just put down the facts required under the rules in the schedules! Furthermore, there may be other business expenses the attorney may think of also to help you. Good luck and I hope my answer assists you.


  5. We don't worry about debt to income. There are places to include all of the income that you mention on form's I&J and and the means test. The amount you are talking about shouldn't cause a problem. Be sure to remember that if you own the business outright that all of the equipment and cash in the business are assets and need to be listed correctly.

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