Chapter 7 bankruptcy has no debt limit for individual bankruptcy filers. Thus, any increase in debtor decrease in income is not going to affect your Chapter 7 bankruptcy eligibility. However, say lawyers of Dallas based bankruptcy law firm Recovery Law Group, you are obliged to disclose your finances as well as update them (if there have been any changes) when you file your bankruptcy papers. Chapter 7 requires this more than Chapter 13 as your income is the primary criterion that determines whether you can qualify for this bankruptcy chapter or not.
In case you are filing for bankruptcy and you anticipate any change in income around your bankruptcy filing, you should intimate it to the court. If you have lost your job, you should add this information to the pertinent documents. Once you have filed the papers, check whether the updated information is included in them or not. You will be asked questions related to income changes by the bankruptcy trustee in the 341 hearing or meeting of creditors. This is important as any increase in income might disqualify you from Chapter 7 eligibility.
In case you are amending any document, you should intimate the bankruptcy trustee of the amended schedule. The same holds true for property too. According to Section 1306 of Bankruptcy Code, any property which is purchased after the beginning of bankruptcy case but before it ends, is dismissed or converted should be included as a part of the bankruptcy estate. Additionally, you should also report any inheritance, bonus, or life insurance received. If the debtor does not follow the rules of disclosure, there can be serious repercussions with respect to the bankruptcy case. Any discharge obtained by fraud means can be revoked. Also, if you fail to disclose financial assets, this could lead to criminal prosecution too (for bankruptcy fraud).
Any individual who is filing for Chapter 7 bankruptcy needs to include their statement for current monthly income. If their monthly income is more than the average state median, they have to undergo a means test. This test is used to gauge the ability of the debtor to pay the creditors through their disposable income. Disposable income is calculated by deducting any and every monthly expense essential for surviving like food, clothes, medical, transportation, utilities, taxes, and housing apart from any secured debts (mortgage, car loan) and court-mandated payments like taxes, childcare, alimony, etc. from the monthly income. If your disposable income is enough to make payments towards unsecured creditors your bankruptcy is converted into a Chapter 13 bankruptcy. thus, any change in your income or expenses might affect your bankruptcy chapter. It is therefore important that you consult with expert bankruptcy lawyers. You can call 888-297-6023to to discuss your case with experienced bankruptcy lawyers.