Income and Chapter 7

If you are filing for Chapter 7 bankruptcy protection, or are considering a possible filing, you may be curious how your earned income is treated both before and after the filing date. A bankruptcy lawyer explains the basics of how your income is treated in Chapter 7 bankruptcy below.

Chapter 7 and Earned Income

When you file for Chapter 7 bankruptcy protection, all wages you have earned up to that point are considered to be part of the bankruptcy case, and thus are subject to being used to repay your debts under the Chapter 7 liquidation plan. Wages earned prior to the filing that have not yet been received are still considered to be part of your income picture and therefore part of the bankruptcy profile. If, therefore, for example, you have worked for a full month and have not yet received your monthly lump sum payment from your employer, it does not mean that you can file Chapter 7 and hope to keep that payment when it comes in after the filing.

Exceptions to this rule involve proving that the income is necessary to pay your living expenses, which you can argue in bankruptcy court.

All income you earn after filing is yours to keep and will not be subject to use in your Chapter 7 case. Think of your filing date as a static picture; anything that happened before that date is part of the Florida bankruptcy case, while anything that happens after is not eligible for consideration in the case.

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