Debts and Income In Bankruptcy
Because the bankruptcy process is based on your debt and income levels, changes to these amounts can drastically affect your case. Therefore, it is important that you know and follow a few rules when you file for bankruptcy in Dallas.
Your income level is one of the main determining factors in how your case will be handled in bankruptcy. Your income is used to evaluate your eligibility to file for Chapter 7 or how much you will repay each month as part of your Chapter 13 repayment plan. If your income level changes at any point during the bankruptcy process, it is important that you report the changes to the court. If your income level increases, you may no longer be eligible for Chapter 7 or may have to pay slightly more in Chapter 13. If your income level decreases, you may find that you become eligible for Chapter 7 or get a reduction in your Chapter 13 payment requirement.
Your debt levels are also important to the outcome of your case. Since you will have to carry a certain amount of debt to be eligible for bankruptcy, it is recommended that you do not pay off any debts prior to filing your case. While you don’t want to purposely default on payments, continue to make minimums to the best of your ability as you enter bankruptcy protection. Also, you don’t want to accumulate more debt just prior to or while in bankruptcy, as these actions may be viewed as fraudulent. A good rule of thumb is to freeze all unnecessary spending and purchases at least 90 days prior to filing your case.