Can I File For Bankruptcy If I Just Got A New Job?

Yes, so long as you qualify for bankruptcy. How long you have been in your current position of employment is not relevant to your ability to file for bankruptcy protection. Your new income, however, is extremely relevant.

There are two places in the bankruptcy petition where income is disclosed, the Current Monthly Income Analysis and Schedule I, and they have two very different purposes.

The Current Monthly Income Analysis (the “CMI”) is a test to determine whether or not you qualify for Chapter 7 bankruptcy and, if not, can determine how much debt you are required to pay back in a Chapter 13 bankruptcy. CMI is a backwards looking test. It analyzes your actual income from all included sources over the six months leading up to the bankruptcy filing, compares your average monthly income to a national standard based on your geography and household size and determines whether or not you are under or over the average (median) income level. If you are under, you qualify for a Chapter 7, though you are certainly still eligible to file for Chapter 13. If you are over, then you must complete a second step, called the Disposable Monthly Income Analysis (the “DMI”) to determine whether you can file for Chapter 7 or must file a Chapter 13. This reduces your reasonable and necessary monthly expenses from your average monthly income. If there is substantial income left after reducing expenses, you have to file for Chapter 13 protection. If the resulting number is low, zero or negative, as many are, then you have backed into eligibility to file for Chapter 7. Having a new job does not have a significant impact on the CMI/DMI calculations because it is backwards-looking.

Schedule I, on the other hand, is a projection of what your monthly income is going to be moving forward through the case. This is where having a new job may impact your ability to file. In Chapter 7, you are proving that you do not have enough income to pay your debts after you pay your necessary monthly expenses. If your new job pays you significantly more than your prior job, you may not be able to prove this in good faith. In Chapter 13, you must prove that you can afford to pay your necessary monthly expenses and pay the proposed Chapter 13 plan payment. Here, if your new job pays you significantly more than your prior job, it may result in you having to pay more into your Chapter 13 plan. If the job pays significantly less than the prior job, you may not be able to afford your Chapter 13 plan payment.

In conclusion, getting a new job does not on its own affect your ability to file for bankruptcy protection. The income from this new job, however, may impact the chapter you file and the feasibility of your case.

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