Chances are if you’ve filed for bankruptcy in the last few weeks or months – maybe even years – it’s been awhile since you’ve felt good about your financial situation.
Long-term stress over money can be difficult, and even the slightest good news can lift your spirits. Something like getting a raise in your wages, even if it’s a small one, can make a huge difference. After all, you’ll have more money now and maybe be able to start accomplishing some of those financial goals you’ve had to put off as you struggled.
Not so fast though!
Depending on your situation and where you stand in your bankruptcy, the money you think will now be headed into your bank account might not be yours to spend just yet. As someone in the midst of bankruptcy, you’ll need to report an increase in income and it will likely be the court that determines where the money is spent.
Honesty is the Best Policy
The most important thing you can do to avoid any problems is to report all of your income to the court when you file for bankruptcy. Be honest when you file about the money you have and the money you receive on a regular basis. Being honest when you file for bankruptcy can save you a great deal of frustration and heartache down the road.
It’s also important for that honesty to continue through the bankruptcy process. If there are any changes you need to alert the court. This isn’t to say that a decade after your bankruptcy is completed you’ll need to fill the court in on the raise you just got at work. However, while your bankruptcy is ongoing, you must report income changes.
Keep in mind, this goes for income decreases, as well. If you happen to lose your job while in the midst of a chapter 13 bankruptcy, there are things that can be done to help you. The rules about notifying the court of any changes in your income are there to ensure you meet your obligations to the best of your ability, but they can also protect you if something changes that’s not in your favor.
Will Everything Change?
Most people are concerned about reporting income changes in the midst of bankruptcy because it could drastically change their case.
Small changes are unlikely to have much of an impact, but a significant change could alter your case.
For instance, if you began the process of filing for chapter 7 bankruptcy as an unemployed individual and you found employment a few weeks later, you might no longer qualify for chapter 7. It doesn’t mean you won’t qualify for bankruptcy, but it could mean you’ll be limited as far as the type of bankruptcy you can choose.
If you’d like to know more about the qualifications for chapter 7 bankruptcy, check out this article from The Balance.
What If I Don’t Tell Anyone?
If you’re thinking you’ll just keep your boost in income to yourself and nobody will be the wiser – think again. There are instances in which people get away with this, but rarely is it worth the risk.
Failing to notify the court of a change can get your case dismissed, which means your raise is going to do you very little good because you’ll be back to square one – owing money to all your creditors and being at risk for aggressive collection efforts.
The best thing you can do is notify your bankruptcy attorney of a change in income and he or she can follow up with the appropriate notifications.
For more information or to discuss questions you have about filing for bankruptcy, contact R. Flay Cabiness, II, P.C. at (912) 554-3774 (Brunswick, GA); (912) 375-5620 (Hazlehurst, GA) or; (912)-554-3756 (Jesup, GA).
