How Income Changes Can Affect Your Bankruptcy Case

Filing for bankruptcy is a significant decision that can provide much-needed relief from overwhelming debt. However, it’s essential to understand how changes in your income can impact your bankruptcy case. Whether you experience a job loss, receive a raise, or start a new job, income fluctuations can have substantial effects on both Chapter 7 and Chapter 13 bankruptcy proceedings. In this blog post, we’ll explore how these changes can influence your bankruptcy case and what you need to know to navigate these situations effectively.

Understanding Bankruptcy Types: Chapter 7 and Chapter 13

Chapter 7 Bankruptcy: Often referred to as “liquidation bankruptcy,” Chapter 7 allows for the discharge of most unsecured debts, such as credit card debt and medical bills. To qualify, you must pass the means test, which compares your income to the median income in your state. If your income is below the median, you qualify for Chapter 7.

Chapter 13 Bankruptcy: Known as “reorganization bankruptcy,” Chapter 13 involves creating a repayment plan to pay off your debts over three to five years. This type of bankruptcy is typically for individuals with a steady income who do not qualify for Chapter 7 or who wish to protect certain assets from liquidation.

How Income Changes Impact Chapter 7 Bankruptcy

1. Means Test Eligibility: The means test is a critical component of Chapter 7 bankruptcy. If your income increases after you file, you may no longer pass the means test, jeopardizing your eligibility for Chapter 7. It’s crucial to monitor your income and consult with your bankruptcy attorney if there are significant changes.

2. Job Loss or Decreased Income: If you lose your job or your income decreases, you might find it easier to qualify for Chapter 7. Lower income can strengthen your case by showing the court your inability to pay off your debts.

3. Reporting Requirements: You are required to report any significant changes in your financial situation to the bankruptcy trustee. Failure to disclose income changes can result in severe penalties, including the dismissal of your case or accusations of bankruptcy fraud.

How Income Changes Impact Chapter 13 Bankruptcy

1. Repayment Plan Adjustments: Chapter 13 repayment plans are based on your disposable income. If your income increases, your monthly payments may also increase, as the court will expect you to pay more towards your debts. Conversely, if your income decreases, you can request a modification to reduce your payments.

2. Job Loss or Income Reduction: Losing your job or experiencing a significant drop in income can make it challenging to adhere to your repayment plan. In such cases, you may be able to modify your plan, temporarily suspend payments, or even convert to Chapter 7 if you meet the eligibility criteria.

3. Bonuses and Windfalls: Receiving a bonus, inheritance, or any other form of windfall during your Chapter 13 case must be reported to the trustee. These additional funds may be used to increase your repayment amount to creditors.

Tips for Managing Income Changes During Bankruptcy

1. Communicate with Your Attorney: Always keep your bankruptcy attorney informed about any changes in your income. They can provide guidance on how to proceed and help you adjust your bankruptcy strategy accordingly.

2. Document Changes: Maintain thorough records of any income changes, including pay stubs, tax returns, and documentation of job loss or new employment. This documentation will be crucial if you need to modify your bankruptcy plan.

3. Proactive Planning: If you anticipate a significant change in your income, discuss it with your attorney beforehand. Planning ahead can help you avoid complications and ensure a smoother bankruptcy process.

4. Stay Informed: Bankruptcy laws can be complex and vary by state. Stay informed about the requirements and obligations related to your specific bankruptcy case to avoid any pitfalls.


Income changes can significantly affect your bankruptcy case, whether you are filing for Chapter 7 or Chapter 13. Understanding how these fluctuations impact your eligibility, repayment plan, and overall case is crucial for navigating the bankruptcy process successfully. By staying informed, maintaining open communication with your attorney, and being proactive about managing your financial situation, you can better handle the challenges that come with income changes during bankruptcy.

If you are in Atlanta, Georgia, and need expert advice on how income changes may impact your bankruptcy case, contact our experienced bankruptcy attorneys at Saedi Law Group. We’re here to provide the guidance and support you need to achieve financial stability and peace of mind.


⚖️ How A Chapter 7 Bankruptcy Works:

⚖️ How A Chapter 13 Bankruptcy Works:

ABOUT SAEDI LAW GROUP: Founder and managing attorney Lorena Saedi started her legal career with a big law firm in Atlanta practicing corporate law and representing large corporations. Although she enjoyed the challenging legal work, she realized that she would rather be working directly with people as opposed to large corporate legal departments. After a short stint in a large bankruptcy law firm in Atlanta, Lorena founded her own firm and the rest is history.  After seeing how client’s cases were serviced at the large “bankruptcy mill” firm, Lorena decided to start her own firm and focus on provided personalized service. Since 2002, Lorena has been helping Georgia consumers get a fresh financial start and providing exceptional client service to her clients. Over the past 22 years, Saedi Law Group has grown to a mid-sized law firm. Our goal is to continue to provide exceptional client service and ensure that our client’s Chapter 7 and Chapter 13 cases are a success. Clients work with the attorney they meet with from start to finish. If a client has any questions or problems in a case, they can immediately meet with their attorney (not a paralegal) to ensure that the matter is resolved. So why choose Saedi Law Group to handle your bankruptcy case? We truly love what we do and we do it with passion. We value our clients and understand what they are going through. Helping clients rebuild their financial life gives us purpose. We see bankruptcy law as a positive way to use the law to help people get back on their feet financially and build a new life. Find out more at 


TOP GEORGIA BANKRUPTCY LAWYERS Saedi Law Group are experienced Atlanta bankruptcy lawyers who have been helping Georgians file for bankruptcy for over 20 years. We have filed thousands of bankruptcy cases here in Georgia and are in court every day fighting for our client’s rights against creditors. If you are currently struggling with overwhelming debt, or feel your financial situation will be severely stressed in the coming weeks, now is the best time to start looking at all options available to you. Saedi Law Group offers a free, no obligation consultation with an experienced attorney (not a paralegal) who will review your specific situation and advise you about your options for moving forward.

Our team is passionate about our work and we take it very seriously. It is a privilege to help clients and their families in times like these. Bankruptcy was created for this purpose. Please contact us today at (404) 919-7296 or to learn about what you can do to protect your future.

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