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Your year-end bonus can affect your ability to pass the means test, depending on certain factors. For example, the bigger the bonus, the greater its effect. Therefore, if you’re getting a bonus and it’s outside the norm of what you usually receive ($5,000 as opposed to $500), that amount is going to increase your monthly average income depending upon when you file your case.
If you’re filing your case in December and you receive a year-end bonus, that bonus won’t necessarily affect you. However, if you want to file your case in the new year and you receive a bonus, you might have cost yourself a window of time, because you probably won’t qualify if you were close.
Suppose you want to file in January. When you receive a bonus, and it’s not usually a part of your average income for July 1 through December 31 of the previous year, that December bonus will be a part of that average. If it’s a bigger bonus, it’s going to make your average income look significantly higher than you actually make.
If you’re considering filing bankruptcy, let your attorney know immediately whether you received a bonus, its amount and the date on which you received it.
File before you receive your holiday bonus for two reasons. If it’s big enough, it will significantly inflate your bank account. Second, even though it’s technically wages and therefore exempt, that bonus complicates the case.
You may be able to time your filing perfectly. Suppose you receive your bonus on December 26 and file your case before January 1. You don’t have to count it to qualify. However, the money is still sitting there, so it’s preferable to file before the bonus is received, if possible.
Attorney Alec Solomita is a skilled lawyer based in Orlando, Florida, who has helped clients like you navigate the intricacies of bankruptcy law. With years of experience, he is prepared to assist you with issues that arise from year-end bonuses and their effect on your eligibility to file Chapter 7 so you can best protect your assets.
Still have questions? Ready to get started? Contact Solomita Law, PLLC today to schedule an initial consultation.
Any money you receive from wages is technically yours to do with as you want, to a point. At the same time, the trustee assigned to your case will be reviewing your bank statements.
If the trustee sees that an $8,000 bonus was spent entirely within two days, it’s probably going to negatively impact you, even though maybe you spent it all on legitimate expenses. The trustee may assume you didn’t want it in your bank account before bankruptcy.
Technically, you’re supposed to disclose bonuses of that nature. If it’s an asset the trustee can access right now, it’s probably one you’re going to lose. If it’s an asset the trustee can’t access, because it’s not available to you until a different time, then it’s probably not going to be an issue.
The trustee can force you to liquidate a stock asset in Chapter 7. If you’re in a Chapter 13, the bonus could affect the case differently.
If you haven’t accounted for your $500 bonus, nobody cares. If you haven’t accounted for your $10,000 bonus, that’s almost a $1,000 increase in your income each month, which is a bigger deal.
While this scenario could come up in Chapter 13 bankruptcy, a stock situation is more of a Chapter 7 issue, because Chapter 7 is a liquidation chapter. The rules are simple: if you can’t protect the asset, it’s liquidated.
For example, if you receive a stock option worth $2,000, you could cash it out tomorrow. However, if you can’t exempt that asset for whatever reason, the trustee has the right to liquidate it, and the proceeds are payable to the bankruptcy estate.
Attorney Alec Solomita is a skilled lawyer based in Orlando, Florida, who has helped clients like you navigate the intricacies of bankruptcy law. With years of experience, he is prepared to assist you with issues that arise from year-end bonuses and their effect on your eligibility to file Chapter 7 so you can best protect your assets.
Still have questions? Ready to get started? Contact Solomita Law, PLLC today to schedule an initial consultation.
If you’re hiring an attorney, let them know about your bonus. They don’t typically think about this issue because most people don’t receive dramatically large bonuses.
However, if you know that you’re receiving a bonus with a value that could affect your case, or if you want to see if it will, the best course would be to consult a Florida Bankruptcy attorney immediately. Give them the facts, and let them tell you how they would handle it.
Most bankruptcy lawyers will advise you to file if you have the ability now, before a bonus becomes an issue. It may be that, even with the bonus, you qualify easily, and timing won’t matter. You won’t know whether your case must be filed right away without speaking with an attorney.
Your lawyer can review your pay stubs and other financial records to determine whether you qualify for a Chapter 7. They won’t be able to answer that question without seeing your information and doing the math first.
It comes down to this: if you’re receiving a large bonus, you should file before the bonus hits. If you’re just getting a quarterly bonus of $2000, however, that might or might not affect your average.
This scenario happens quite a bit. My first step would be to determine whether the bonus affected your qualification. If so, we’ll discuss your options.
Suppose you want to file a Chapter 7, and you would qualify if not for the bonus. It wouldn’t be a matter of getting the bonus off the books. Instead, you’d want the bonus off the qualification period. Are you going to receive another bonus before the end of the year? If not, we can qualify you in six months.
If you think that you still qualify but have already spent your bonus, I would see what you spent your bonus on. If I thought it was an issue, we would discuss it, because if we file your case, it may be something we have to deal with.
Alternatively, you could wait three to six months before filing. It’s farther down the road. It doesn’t have the freshness that it would right now, and often, that makes the issue much less stressful.
For more information on Florida bankruptcy and year-end bonuses, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (407) 255-7458 today.
Attorney Alec Solomita is a skilled lawyer based in Orlando, Florida, who has helped clients like you navigate the intricacies of bankruptcy law. With years of experience, he is prepared to assist you with issues that arise from year-end bonuses and their effect on your eligibility to file Chapter 7 so you can best protect your assets.
Still have questions? Ready to get started? Contact Solomita Law, PLLC today to schedule an initial consultation.
