Many Colorado residents would love to see a bump in their income. With the monthly mortgage bill, credit card bills and other obligations, it often seems as if there is never enough money to pay off all of the expenses a person may have.
Typically, individuals may think of bankruptcy as a means of getting a fresh financial start when they are in the situation of not having enough income to pay off these expenses. While that is true for the most part, there are situations where a person should still strive for a certain amount of income, even in bankruptcy.
Namely, in Chapter 13 bankruptcy, a repayment plan is set up that allows the person to make manageable monthly payments while discharging the debt against them. However, in order to make these payments, it is necessary that the person earns a certain level of income, as the monthly repayment plan must be complied with in order to receive a debt discharge. Accordingly, the person must have enough income to fulfill their debt obligations that are determined as a person is filing for Chapter 13.
There may be further issues for some individuals in determining what exactly constitutes income. For example, some have questioned whether the receipt of child support constitutes income for purposes of Chapter 13. Often, these payments are considered income, but only if the person is actually receiving the payments in the first place, which can be an issue when the other spouse fails to make the payments.
Moreover, even if a certain income level is calculated, individuals have the right to deduct certain expenses. For example, expenses related to supporting children may be able to be deducted from a person's income. Ultimately, there may be many questions about a person's income and eligibility for Chapter 13, which is why it makes sense for individuals to speak with a qualified bankruptcy attorney to determine their options for debt relief.
Source: Huffington Post, "My child support is making my Chapter 13 bankruptcy tough," Steve Rhode, Dec. 11, 2013