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What happens if I file for Chapter 7 and my salary increases by $1000 or so after my filing date? Will I have to refile?

New York, NY |

New York

Attorney Answers 3

Posted

In order to qualify for Chapter 7, income received during the 6 calendar months preceding the petition filing is compared to the median income for a household size like yours in your state. That calculation is called the "means test." Once the bankruptcy is filed, disclosure of income is not routinely required. In fact, paying attention to such detains and timing the filing of a bankruptcy is commonly done by adept bankruptcy attorneys. There is a requirement to disclose any expected income change of 10% or more on Schedule I, but some ambiguity is tolerated. In the event the trustee moves to dismiss under the "totality of circumstances" argument, conversion to Chapter 13 could be an option.

An issue like this is just one more reason to retain experienced bankruptcy counsel for representation. Bankruptcy is complex, a minefield of opportunity to self-inflict irrevocable damage. If you do not know a capable bankruptcy lawyer, use the attorney-finder at www.nacba.org.

Best wishes for a favorable outcome, and please remember to designate a best answer.

This answer is offered as a public service for general information only and may not be relied upon as legal advice.

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Posted

In order to qualify for a Chapter 7, your income from the 6 months preceeding the month in which you filed the bankruptcy is considered. Your income is also reported on Schedule I – the income portion on the budget. Based on what you presented in your question, it appears that you qualified for the chapter 7 based on your 6 months income and your balanced budget. Have you had your 341 hearing yet? If not, you should be prepared to answer any questions about increased income if the trustee asks this. However, in my experience an increase of income in the $1000 range has not triggered the Trustee to reevaluate your eligibility for a Chapter 7.

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Posted

No. Your income is based on the 6 months prior to filing bankruptcy. Also, I do not see how except in the rare case a $1,000 per year increase would affect your qualification to file.

If the increase is $1,000 per pay period and you know about it before filing, it may raise a good faith issue if you are asked that question. But all questions regarding the information you provide in your case are as of the date of filing not after filing.

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2 comments

Paula Brown Sinclair

Paula Brown Sinclair

Posted

Except, Mr. Schwartz, that pesky question at the bottom of Schedule I.

Michael Hal Schwartz

Michael Hal Schwartz

Posted

As you said "but some ambiguity is tolerated."

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