QUESTION
Would a salary raise have an effect on bankruptcy and the means test?
Asked on Aug 23rd, 2012 on Bankruptcy - District of Columbia
13 ANSWERS
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Yes.
Answered on May 28th, 2013 at 9:54 PM
Yes.
Answered on May 22nd, 2013 at 10:12 PM
Criminal Law Attorney serving Fremont, CA
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Steven J. Alpers, A Professional Corporation
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Yes.
Answered on May 22nd, 2013 at 10:07 PM
Chapter 7 Bankruptcy Attorney serving San Francisco, CA
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Bertrand, Fox & Elliot
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Yes, it would. You should consult an experienced bankruptcy attorney to determine your eligibility for filing.
Answered on Aug 27th, 2012 at 4:39 PM
The means test takes the last 6 months of income and multiplies it by 2 to determine your Annualized Current Monthly Income*. It then compares the income against the median in your state with your household size. The raise would increase your average for as many months as you are receiving the money before filing. It would only have an effect if you were very near the median income, it was a significant raise, or a combination of the two and you have been receiving the higher salary for several months. * - While most of the lines on the Form 22A ask for you to enter the average monthly income for the last 6 months or (6monthsincome / 6), the heart of the test is the comparison of line 13, which is the (monthly average income * 12), to the state median. (Anynumber / 6) * 12 = Anynumber * 2. Sorry for the algebra.
Answered on Aug 25th, 2012 at 1:40 AM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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Yes, it will affect the 6 month average.
Answered on Aug 24th, 2012 at 3:41 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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Definitely. It is very important that you talk to a competent bankruptcy attorney before proceeding forward. Please understand that filing for bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
Answered on Aug 24th, 2012 at 3:38 PM
Bankruptcy Chapter 7 Attorney serving Fort Collins, CO
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The Salas Law Firm LLC
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Potentially. The means test uses the last 6 months average as its base with minor adjustments. If you have a pay increase I would think about filing sooner rather than later.
Answered on Aug 24th, 2012 at 3:37 PM
Maybe, maybe not. It depends on your unique circumstances.
Answered on Aug 24th, 2012 at 3:35 PM
Real Estate Attorney serving New Port Richey, FL
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Jay W. Moreland, P.A.
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Yes it would. The means test calculation is made before you file a bankruptcy. It is based on your income during the six months prior to the date a bankruptcy is filed. Thus if you file before receiving your first pay raise check, your means test calculation will be based on your previous income. Each new month of raises eliminates a month of your lower salary and replaces it with your new higher salary. After six months your lower salary will be completely replaced by your new salary. If the higher salary at any point puts you above the means test limits, you may not be eligible for a Chapter 7 bankruptcy. So if your higher salary would put you above the menas test limits, but your old salary would not, it would be best to file quickly. Conversely, if you had just lost a job, postponing the filing of a bankruptcy might enable you to fille a Chapter 7 when your previous salary would disqualify you.
Answered on Aug 24th, 2012 at 3:35 PM
Barbara A. Fontaine
Yes, a salary raise would have an effect on the means test. It would depend on if the raise were enough to go past the ceiling for the means test, so that you could not be in chapter 7 but in chapter 13. Check to see if it is that big. Were you near the limit before?
Answered on Aug 24th, 2012 at 3:34 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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Yes, it can. You must provide 6 months work to paychecks. If the raise is not substantial, the effect would not be too bad, overall.
Answered on Aug 24th, 2012 at 3:34 PM
Bankruptcy Attorney serving Washington, DC
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Law Offices of Diann C. Moseley
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If you have already filed bankruptcy, no. The means test is calculated based on your average income for the preceding six months. If you have not filed, then the raise is included in the prior six month average income.
Answered on Aug 24th, 2012 at 6:57 AM