The Effects Of Your Income When Filing For Bankruptcy

Did you know that your income plays a role in your ability to file for Chapter 7 bankruptcy? Your income is one of several factors that attorneys analyze before offering advice and suggestions about filing. If you want to use the right branch and get the most out of your bankruptcy case, you might want to learn more about the effects of your income on bankruptcy before meeting with an attorney. Here are several things to know about your income when you decide to seek advice from a bankruptcy attorney.

Your Attorney Asks for Proof of Income

The first thing to understand is that your bankruptcy attorney will ask for proof of income for the last six months. In other words, bankruptcy lawyers look back 180 days to see a person's average income. When you prepare to visit a bankruptcy law firm, you will need to gather evidence of all your income from this time.

You can bring your pay stubs from your job if you earn money through an employer. You can also bring any statements that reflect additional income you earned during the last six months. It is also vital to know that you must include windfalls of cash in your income if you received any in the last 180 days. Windfalls might come from an inheritance, job bonus, lottery winnings, lawsuit settlement, or anything else. You must include every source of income you have.

Your Attorney Completes a Means Test

Many people hope to use Chapter 7 bankruptcy, but you should know that this is not always an option. To determine if you can use it, your lawyer will work through some numbers. Lawyers do this by using a means test. The main premise of this test is to compare your income to the average income where you live. Lawyers use a chart to see the average income in your state, and they compare your income to this amount. The average income chart considers the state where you live and your family size.

If you earn less than the amount on the chart, you can file for Chapter 7. Earning less than the average puts you in a category where you cannot repay your debts. If you earn more, though, it means you can repay your debts and must use Chapter 13 bankruptcy.

Do you have questions about bankruptcy and the effects of your income? If so, contact a Chapter 7 bankruptcy lawyer today to learn more.