When we talk about filing for bankruptcy, we’ve got to consider your financial position. Can you afford to pay the bills as they come due, or are you drowning? It’s not a question of being broke, it’s one of balance.
But there’s often more than what you think of when crunching the numbers.
Part of your income comes from wages, the money you earn from employment. Wages are used when calculating your current monthly income for means testing purposes (assuming you’re subject to the means test in the first place).
To talk about wages, however, your bankruptcy lawyer’s going to need to look at the gross figure – what you make before taxes and other “top of the line” costs are deducted. In other words, it’s not so much what you come home with as it is what comes out of the employer’s pocket in connection with bringing you to work.
Your wages, however, aren’t all that’s included in your income. Nor, for that matter, is it all that’s included in your financial picture. To determine where you fall in terms of means testing, you’ll need to disclose all sources of income (yes, even the cash). Self-employment, interest and dividend income – the whole nine yards.
This is required for a complete and accurate bankruptcy assessment, but it’s also useful when reviewing your financial situation. Are you over-withholding from your paycheck? Is there income that’s not going to the best possible expense?
All good questions, to be sure. Start with your wages, and let’s move on from there.
Image credit: Leo Reynolds
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