Considering Bankruptcy? Here’s what you need to know first

July 7, 2020

By Attorneys Salvador Gutierrez and Whitney Francisco

Does COVID-19 have you in a financial bind and right now you’re wondering how to pay your debts? Are you considering filing a bankruptcy but don’t know if it’s the right solution for you or if you qualify? If you answered yes to any of these questions, then you’ve come to the right place for answers. Bankruptcy is a great tool to aid individuals/businesses in getting a better handle of their debt and a great starting point on the path of financial freedom.

One of the first things that must be determined before filing a bankruptcy is whether you are above or below the median income for your household size in your state. Median income is determined by averaging your monthly income from all sources during the full six calendar months before filing date of your bankruptcy. On Form 122A-1 you must list all your gross income. Then you will compare it to the medium income for a family of the same size in your state. If your income is less than or equal to your state’s median income for your household size, you will pass the test.

All income from all sources must be included when determining your current monthly income. Here is an example of the kinds of income that must be included.

  1. Wages, salary, tips, bonuses, overtime, and commissions
  2. Net income from the operation of a business, profession, or farm
  3. Interest, dividends, and royalties
  4. Net rental income
  5. Pension and retirement income
  6. Child support or maintenance support
  7. Unemployment compensation
  8. Worker’s compensation
  9. Annuity income

There is some income that does not have to be included when factoring your monthly income:

  1. Social Security Income
  2. COVID-19 Stimulus Proceeds

 

Call us today at 312-818-6700 so that we can set up a consultation for you with our experienced attorneys who can review your situation in more detail and help you determine if bankruptcy is the right option for you. Even if you don’t want to file bankruptcy, we have the experience to help you with settling your debts also. Contact us now, so that we can assist you with all of your debt relief needs.