What income do I need to disclose in my bankruptcy?

  • Retirement income
  • Pensions
  • Social security
  • Stock distributions
  • Trust disbursements

Means Test Income

All debtors filing bankruptcy are required to take a “means test” which will determine if they need to file Chapter 7 or Chapter 13 bankruptcy.

For purposes of the means test, the U.S. Bankruptcy Code defines current monthly income as including: “any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor’s spouse), on a regular basis for the household expenses of the debtor or the debtor’s dependents (and in a joint case the debtor’s spouse if not otherwise a dependent)…” Benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism or domestic terrorism on account of their status as victims of such terrorism are excluded from the means test.  Stimulus payments from the Covid-19 pandemic are also excluded from the means test but could be an asset.

The means test looks back at the past six months of income as defined above. If you file a bankruptcy in January, the past six-month (or look back) period is July through December. It is this six-month period that will determine what your average annual income is. You must compare your average annual income based on the past six-month period to the median average for your state to see if you qualify to file a Chapter 7 bankruptcy. If your income is too high to file a Chapter 7 you may still qualify to file a Chapter 13.

All of it gets listed one way or another:

  • Wages
  • Commissions
  • Bonuses
  • Vacation pay
  • Business income
  • Workers Compensation
  • Unemployment
  • Regular contributions from family
    or housemate
  • Disability