Clients are smart to ask about timing issues with filing a bankruptcy. I get a lot of questions about income, as some clients expect income to increase in the near future, but have struggled recently with insufficient income.

When you file a Chapter 7 bankruptcy, the income the bankruptcy trustee is most interested in is your earned income from the six months prior to filing. Specifically, the six month period ending the last day of the month preceding your filing date.

Current Monthly Income is an expansive term, so my clients and I always discuss full disclosure. For instance, money receive on a regular basis for your dependents is included in your CMI. If you are filing a joint bankruptcy case, then income for both spouses is included.

What Else Is Included?

In addition to regular income, payments received under the Social Security Act, tips, bonuses, overtime and commissions are included. If you’re a business owner, the net income from a business or profession is included. If you rent property, the net income from that rental property is included. Pension and retirement income is also included. Unemployment and disability benefits are also included.

Essentially, this is reflective of the goal in bankruptcy—to analyze your complete financial picture to determine whether you are entitled to relief.

Sometimes It’s Tricky

There are instances of course where income is not regular. Your bankruptcy attorney goes to bat for you in these situations where an argument can be made that the income should not be included as CMI, or should only be partially included. If you receive a one-time bonus for example, or have a business with irregular activity during the year. Often, the attorney can argue for you that you received income during the last six months that was attributable to employment over a longer period of time, including bonuses and commissions.

It’s A Phone Call Away

The answers are easily discoverable. My job as a bankruptcy attorney is to educate people about their choices. Call me to discuss your situation and I will do my best to help you get clarity. You can reach me at 704.749.7747 and the call is free.