The effect of a raise on your bankruptcy depends on the bankruptcy chapter you file for and also on the amount of raise. In the legal world, the term “Material” is often referred to. In a legal sense, it means “Significant”. The term “Material Witness” can be used for describing a raise. A raise can affect your case if it is big enough to have a “material” effect on your income.
To qualify for Chapter 7, apart from a few exceptions, you will have to prove that your income is less than the average income for the size of your family. This is known as a “Means Test”. Your income will be calculated by adding your income of the last six months and multiplying it by two. This will give a quasi-accurate report of your future income. In case the rise occurs after the filing of Chapter 7 and the qualification happened on the date of filing, there will probably be no effects of the raise on your case. However, in the Means test, you will have to report about the anticipated raise, in case you know it is coming.
The effects of a raise are different in a Chapter 13 case. This type of case allows you to reorganize your debts. The secured creditors get the complete repayment and the unsecured creditors are paid the leftover disposable income. Getting a raise increase will increase your disposable income and the unsecured creditors will get paid more. Thus, you will be unable to use the raise for yourself, as that money will be filing the pockets of your unsecured creditors unless the case is over. However, if your unsecured creditors are getting the complete payments, the raise will help you in paying off everyone sooner, after which your case will close.
For any further queries about the effects of raise in your bankruptcy case, contact The Recovery Law Group (Los Angeles & Dallas, TX) at www.recoverylawgroup.com or on 888-297-6203.