Wages and Salary

• A Chapter 13 bankruptcy petition considers the entirety of a debtor's earned income. This includes overtime and bonuses. If you work on a commission basis, it includes any base salary you receive plus the commissions. If you earn tips, they are included as well.
  
  

Business Income

• If you're self-employed, a Chapter 13 plan uses any income produced by your business. You can deduct "reasonable" costs of operation, but not depreciation of vehicles or equipment. Unlike on a tax return, you cannot report negative income for a business operation on a Chapter 13 petition.
  
  

Unearned Income

• Issues of unearned income are some of the most controversial and contested regarding Chapter 13 qualifications, so if you're thinking of filing for this type of protection, and your income includes money from passive sources, speak with an attorney to find out where you stand. Generally, royalties, dividends, retirement benefits, trust fund payments and interest from investments all count toward your Chapter 13 income. Unemployment benefits count, though debtors have disputed this in litigation on a state-by-state basis.
  
  

Gifts and Assistance

• Child support or alimony you may receive also count toward your income in a Chapter 13 plan. If a family member has been regularly helping you make ends meet either with cash monthly payments or by paying some of your bills for you, you must include this in your income as well. If you have a roommate other than a spouse who contributes to your monthly expenses or pays you rent, the trustee will consider this too.
  
  

Exemptions

• The law exempts only a few types of income from consideration in a Chapter 13 plan. Social Security income does not count toward your "current monthly income" or CMI, nor do restitution payments some debtors receive as victims of war or terrorism. Tax refunds and loan proceeds are also exempt.
  
  

Tips

• A Chapter 13 bankruptcy petition includes several sections involving income. The exemptions and rules that apply to your current monthly income may not apply to your projected disposable income, what you're planning to use to repay your debts under the plan. In June 2010, U.S. Bankruptcy Chief Judge William T. Thurman of Utah ruled that while Social Security income does not have to be included in your current monthly income, it must be included in your projected disposable income. Thurman decided that a debtor who failed to include it in his projected disposable income did not act in good faith and he allowed the trustee to deny the bankruptcy. According to the U.S. Trustee Program, state courts have the right to make decisions such as this that might differ somewhat from federal law. If you receive any sort of exempt income and you're planning to file for Chapter 13 bankruptcy protection, keep that money segregated in an account separate from your exempt income so you can prove its source when and if you need to.