Do I Keep All My Wages After Filing Bankruptcy?

Does Going Bankrupt Impact My Salary?

If you’re considering filing for bankruptcy, you likely have plenty of questions. One of the most common concerns people have is whether they can keep their wages after filing for bankruptcy. This article aims to provide a comprehensive answer to the question, “Do I Keep All My Wages After Filing Bankruptcy?”

Understanding Bankruptcy

To answer our main query, we first need to understand what bankruptcy is. Bankruptcy is a legal process that provides relief to individuals or businesses that cannot pay their debts. It offers a fresh financial start while ensuring fair treatment to creditors.

Immediate Impact of Filing Bankruptcy

The moment you file for bankruptcy, an automatic stay goes into effect. This stay immediately stops most creditors from trying to collect what you owe them. This means that wage garnishments, which are legal orders to withhold part of your paycheck to pay off a debt, are also halted.

 

Note: It’s crucial to understand that this automatic stay is temporary. It remains in effect until the court lifts it or the bankruptcy case concludes.

 

Wage Protection in Bankruptcy: The Basic Rule

So, do you keep all your wages after filing bankruptcy? The general rule is yes – you get to keep all your wages earned after the date of your bankruptcy filing. This is because these earnings aren’t part of the bankruptcy estate, meaning they’re yours and not available to your creditors.

Exceptions to the Rule: Surplus Income

You might be wondering if there are exceptions to this rule. The answer is yes, and it comes in the form of “surplus income.” If your income surpasses a certain threshold set by the government, you may need to make additional payments during your bankruptcy.

Here’s a simple table that explains the concept:

Number of Dependents Threshold
0 $2,543
1 $3,165
2 $3,891

For example, if you’re a single individual and your net monthly pay is higher than the threshold, you’re required to pay half the difference to the trustee. This payment is known as surplus income.

Calculating Surplus Income

Calculating surplus income can be quite tricky because certain things are deductible. It’s highly recommended to contact a bankruptcy professional for a free initial consultation to help you understand this process better.

Bottom Line: Do I Keep All My Wages After Filing Bankruptcy?

The short answer to “Do I keep all my wages after filing bankruptcy?” is yes. However, surplus income provisions may require you to make additional payments if your income is above a certain limit.

When contemplating bankruptcy, it’s essential to remember that every situation is unique. It’s always a good idea to consult with a bankruptcy professional who can provide guidance based on your specific circumstances.

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