Chapter 13 and Schedule I When Applying for Bankruptcy

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A Personal Story

This personal bankruptcy story along with a question was shared on a bankruptcy forum website this January in 2012: “I currently have my Chapter 13 monthly monies taken directly from my current employer once a month and have been for the last 18 months. I applied for a new job but was wondering what steps i would have to take if i accepted this new position. Do i need to completely re-do all my paperwork with the trustee, or is it as easy as sending in my payment on my own and not telling them?”

Not Telling Trustee Could be Bad Idea

Not telling a bankruptcy trustee important information during a Chapter 13 process might be bad idea, especially if the trustee finds out about it after the fact and you have broken a bankruptcy law you were not made aware. You should always consult with your bankruptcy attorney before concealing any information that may or may not affect an ongoing Chapter 13. The bankruptcy lawyer should know the law affecting your request on bankruptcy or at least know how to find it.

Filling Out Schedule I

When you fill out your schedules in your bankruptcy application as an individual debtor filing a Chapter 13, you will be required to fill out Schedule I, Current Income of Individual Debtors. The first 16 lines of the this schedule ask you to give a description along with documents supporting your current combined monthly income. Line item number 17 on the schedule, the last request made by the document, requires this information from you: “Describe any increase or decrease in income reasonably to occur within the year following the filing of this document.” Two lines of space are allowed by the applicant for any answer to this requirement.

You cannot lie about what you are anticipating in income for the coming year on line item number 17. That means if you are seeking new employment or you are anticipating a raise, you need to indicate so in the two lines provided. Again, this is where a bankruptcy lawyer can help you in making decisions based on potential gray areas of the law.

One thing is for certain, failing to reveal such information can be considered fraud if proven that you knew of the event prior to filling out Schedule I. Therefore, if you receive an increase in income after filling out Schedule I, the trustee could request a dismissal of the case, or worse, accuse of you of fraudulent intent if he suspects you knew of the event prior to filing. Either or both of these situations could be considered counterproductive to your intentions concerning your filing bankruptcy.

Potential Answers to a Debtor’s Questions

Generally, in answer to the inquiry made by the illustrated personal bankruptcy story, you most likely would not need to provide the trustee with all new paperwork and completely start over. If you listed the potential increase in income on line item number 17, you would need only tell your lawyer or the trustee of the increase. If there is any additional paper work needing to be submitted for the change, your lawyer or trustee will provide you with the details concerning the change.

In the event the increase in income is unexpected and was not listed on line item number 17 in Schedule I, there are circumstances that would allow you to keep the increase because it happened after the filing date. Nevertheless, it is a good idea to consult with a bankruptcy lawyer about these potentially gray areas of the law.

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