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Why do you need 6 months of income history?

Why do you need 6 months of income history? Shouldn’t only my current income matter?

Clients often question the reason we need a full 6 month income history that includes all sources of income including rent, household contributions, unemployment, etc. The simple answer is we need if so that we can complete the petition paperwork. However, clients typically want to understand more of the process. We need the documentation to complete the means test. The means test is essentially the detailed formula used to determine whether you will be required to pay a portion of your creditors back through a repayment plan knows at the Chapter 13 plan. If you earn less than the median income you do not have to take the full means test. Median income depends on household size and average income for the county you live in.

What is considered income? All of the following are income that must be included in the means test calculation:

  • Wages, salary, bonuses, commission
  • Unemployment
  • Retirement income
  • Tax refunds
  • Net income from business
  • Net rental income
  • Support payments that are received (child support, alimony/maintenance)
  • Household contributions that are regularly contributed to your living expenses
  • Insurance payments
  • Gift and inheritances

What if I do not have paystubs?

The trustee of your bankruptcy needs several things:

  1. Past 60 days of paystubs
  2. Most recently filed state and federal taxes
  3. Bank statement from the date of filing

What happens if you do not have paystubs either because you do not work or you do work but are not provided paystubs (for example someone who is self-employed or on a 1099). And what happens if you filed taxes but do not have a copy or if you did not file taxes because you are not required to?

An affidavit can be provided to the trustee in place of any of the above documentation.

If you are working and just do not have paystubs then the affidavit will ask you to state the amount of income you have the past 60 days. If you have had no income the past 60 days the affidavit will simply ask the last date that you were employed.

If you did not file taxes last year it will ask the reason that you were not required to file taxes. If you filed taxes and do not have a copy it will ask why a copy cannot be provided.

This affidavit however should not be used to prevent effort in obtaining these documents. If you lost your paystubs, you can contact payroll to get copies. If you lost your taxes, you can call IRS and Missouri Department of Revenue and ask that copies be sent to you.

The trustee prefers to see these documents. But it in the case that they are not available, the affidavit can fulfill this requirement.

 

 


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