Determining "Current Monthly Income" In Bankruptcy

Columbus Georgia Bankruptcy Lawyers

Bankruptcy can save you in circumstances where there are no other options for you to turn to regarding finances. Bankruptcy Code is a federal law as well as complex. There are many restrictions on repeated filings and filing under various chapters as specified in the code. The new reforms to the code in 2005 have made it difficult to qualify for chapter 7 bankruptcy. A new means test and compulsory credit counseling have been added to the process irrespective of chapter under which you file. The Means Test is the qualifying tests for chapter 7 and those who fail have to file for insolvency under chapter 13.

All people who file for bankruptcy have to determine their current monthly income. This information is vital since it is used in the means test. The current monthly income is also required in a chapter 13 filing where it is used to calculate amount to be paid in the repayment plan. Form 22c is where current monthly income has to be filled in and this has to be attached with the bankruptcy petition while submitting it in Bankruptcy Court.

Current Monthly Income

Defined as average monthly income from all sources received by debtor, current monthly income is an important piece of information. Average monthly income should include all sources irrespective of whether it is taxed or not. The average income for six months is calculated and average established. The end of the six month period should be the last day of calendar month prior to filling of bankruptcy petition or sometimes it is determined by the court.

All money that flows into the household regularly has to be included while calculating average. There are certain sources that can be exempted under the law and these are social security, payments to victim of terrorism, payments to victims of crimes etc. Your current monthly income has to be supported by evidence such as pay stubs, bank statements, dividend statements, financial documentation, etc. If the proofs submitted do not satisfy the court, Court can order additional documentation to be filed and sometimes even tax returns have to be handed over to trustee a week before the first hearing is scheduled to take place.

Tax returns for two previous years have to be handed over in cases where bankruptcy has been filed under chapter 7 while three year tax return records have to be submitted in case of chapter 13 bankruptcy filing. More recent returns can be asked for if bankruptcy case is filed at the beginning of a year. Thus it is wise that debtors file their tax returns as soon as possible. In chapter 13 bankruptcy, tax returns have to be submitted every year as proof of current income.

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