Question of the Week: Will my new job affect my Bankruptcy filing?
in bankruptcy, Chapter 13, chapter 7, planning, timing
If a would-be Chapter 7 debtor were to see a significant change in their income before filing a Chapter 7 bankruptcy, there is a risk that the debtor would no longer qualify under the Chapter 7 Means Test, and must file under Chapter 13. While Chapter 13 Bankruptcies are often effective in allowing a debtor to cure mortgage arrearages and keep their house, if the debtor’s intention is to pursue liquidation of all assets (including the house) or does not have real property to protect, your increased income would be required by the U.S. Trustee to fund the Chapter 13 plan, and not be used for other costs/expenses. In this case, a Chapter 7 Petition should be filed before any increase in income.
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