P Is For Pay Advice

In the bankruptcy alphabet, the pay advice is the ticket into the game. Tally the score at the end of this particular game to find out if you win.

As part of the bankruptcy process, you’ve got to go through the means test (unless you’re exempt). Depending on the size of your household and the applicable median income, you may qualify for Chapter 7 or be forced into Chapter 13.

See how neatly the bankruptcy alphabet is tying it all together for us so far?

Stay with me awhile longer.

Pay Advices For The Means Test

In order to get through the means test, you’ve got to provide me with your pay advices (that’s the fancy bankruptcy of saying “paystubs”) for the six month period immediately prior to your bankruptcy filing.  Without this information there’s no way to calculate the means test.

Not only will I need your paystubs, I will also need your spouse’s.  That’s the case even if your spouse isn’t filing bankruptcy with you.

Why?  Because remember that income goes for the entire household, not just you.  I need to be able to take a look at what the entire household is bringing in, though I’ll be able to deduct any money your spouse doesn’t use for the household upkeep.  I call it the “means test hokey-pokey” (put your left foot in, take your left foot out … get it?)

Pay Advices For The Trustee

The the U.S. Bankruptcy Code you’re also required to provide the trustee with copies of your pay advices for the 60 days before your case is filed.  Some courts require you to file the pay advices with the petition as well.

Lots of my clients are self-employed or are paid in cash (taxi drivers, waiters and waitresses).  If that’s you, don’t freak out.  We will need to tally up your income to handle the means test.  Once that’s done we can prepare an affidavit regarding the lack of documentation.

We’ve got the same solution if you’re unemployed, by the way.  After all, you can’t produce something that doesn’t exist.

In the end, it’s all a question of calculations and disclosure in bankruptcy.

Image credit:  Leo Reynolds

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