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How To Property Disclose Income During Bankruptcy

Posted By admin || 30-Aug-2010

How To Property Disclose Income During Bankruptcy

Filing Out Your Statement of Financial Affairs

When a debtor files bankruptcy, they must fill out what is called the Statement of Financial Affairs.  On the Statement of Financial Affairs the debtor must disclose all the income they have earned from employment or the operation of a business.  They must also disclose to the bankruptcy court all income received from any other sources.

Here a few things you need to know about properly disclosing income on your bankruptcy's Statement of Financial Affairs:

  1. The bankruptcy debtor must disclose all income received for the year that they are filing bankruptcy and the previous two years.  For example, if a debtor filed bankruptcy in October 2010, they would need to disclose all income for the years 2008 and 2009.  This can usually be accomplished by providing tax returns, W-2s, paystubs or a profit and loss statement if the debtor is self-employed or owns a business.
  2. If a debtor is filing Chapter 13 bankruptcy or Chapter 11 bankruptcy they need to also disclose their spouse's income.  The disclosure of a spouse's income when filing Chapter 7 bankruptcy is not required on the Statement of Financial Affairs unless the spouse is also filing bankruptcy. However, since the spouse's income is already listed on the Means Test, many bankruptcy attorneys also list it on the Statement of Financial Affairs when filing Chapter 7 bankruptcy despite the fact that it is not required.
  3. When disclosing income on the Statement of Financial Affairs the debtor must include all income even income that is exempt in bankruptcy such as Social Security and child support payments.  Also, if the debtor is being paid in cash or "under the table" this income should also be included in the bankruptcy filing's Statement of Financial Affairs.
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