Employee Income Records

Every Western District of Pennsylvania bankruptcy requires the filing of "employee income records". The exact requirements, which I will discuss below, varies from trustee to trustee. But, in every case these records are intended to provide important information that is used by the trustee to verify your eligibility to file bankruptcy.

Income is important in bankruptcy. It determines how much, if anything, you are required to repay your creditors. I always tell my clients, "we don't TELL the court anything, we have to SHOW them." Employee Income Records are no different. We can't just tell the court and the trustee how much money you have earned, we need to show them with pay stubs, bank statements, and tax returns. In all cases we will need to provide the trustee with proof of income from ALL sources for the 60 days before filing bankruptcy. This will obviously include income form work, and we will need to provide pay stubs for this period. It also includes income from sources such as Social Security, unemployment, child support, alimony, pensions, or even household contributions. If you do not have tangible proof of these payments, I will draft a verified statement for you to sign which basically attests that you received the payment.

It should also be pointed out that if you are married, we must provide proof of income for your spouse as well, even if your spouse is not filing. The court looks at "household income", which will include a working spouse's pay. There is an important exception... if you and your spouse are legally separated, you are not required to provide their income. In these cases, their income is not "household income."

There are additional requirements for employee income records beyond proof of income for the last 60 days, though the exact requirements vary by trustee. All trustees will want to see your most recent tax returns and W2s. This is so they can verify your income for the last year. If it was very high, they will want an explanation (for instance, say you made $250,000 the year before filing bankruptcy) as to where the money went. Some trustees will want to see the last two years before filing. Tax returns will allow the trustee to see all sources of income for the last year or two, and compare it against the rest of your statements. If your tax return shows a disbursement from a retirement account, it better be accounted for in your petition.

Trustees sometimes also want to have proof of any retirement accounts or life insurance policies. They want to verify that no large deductions have recently been taken from these accounts. If you are self-employed, the Chapter 13 trustee will want to verify one year of business income and expense statements, and you will need to complete a business questionnaire (this is a topic for another blog post). Some trustees also wish to be provided a copy of the voluntary petition filed with the case.

I will know exactly what information is necessary to provide when your trustee is assigned. I collect all of this information before filing in anticipation of providing the employee income records. I forward all of the information from my office, so you will not need to worry about any of this, but it is good to understand why you need to provide it. When the employee income records are properly compiled, there are rarely issues with the case.

Contact us if you have any questions about bankruptcy and wish to set up a free consultation.