People most likely to overlook omitted income when filing for Chapter 7 bankruptcy often don’t realize that all sources of income — not just regular paychecks — must be disclosed. This includes gig work, side hustles, irregular payments, and even non-cash income. Whether intentional or not, leaving out income can lead to a dismissed case, denial of discharge, or accusations of fraud.
Omitted Income (Side Gigs, Gig Work, Bonuses)
| Example | Why People Omit It | Risk |
|---|---|---|
| Income from Uber, Lyft, DoorDash, etc. | “I didn’t make much” or “It’s not steady work” | All income, even irregular, must be reported |
| Freelance or 1099 income (e.g., consulting, graphic design, tutoring) | “I’m not doing it full-time” | Can impact Means Test eligibility or be viewed as hidden earnings |
| Rental income from roommates or Airbnb | “It’s just cost-sharing” or “I didn’t report it to the IRS” | Still must be included in income calculations |
| Commissions or bonuses expected soon | “It hasn’t hit my account yet” | If earned, it may be part of the bankruptcy estate |
| Cash under-the-table jobs | “No paper trail, so doesn’t count” | Fraud if omitted — trustee can investigate bank activity or lifestyle |
| Hobby income (Etsy, eBay, farmers market sales) | ||
1. Gig Workers and Side Hustlers
Who:
- Uber, Lyft, DoorDash, Instacart drivers
- Freelancers on Upwork, Fiverr, TaskRabbit
- People with Etsy shops or selling on Facebook Marketplace
Why They Omit Income:
- “It’s not a real job — it’s just extra”
- “It’s inconsistent”
- “It’s not reported on a W‑2”
Commonly Missed Income:
- Cash tips
- Venmo/PayPal/Zelle payments
- Freelance 1099 payments not yet reported to IRS
2. Self-Employed or Small Business Owners
Who:
- Sole proprietors, independent contractors, LLC owners
- Hairstylists, landscapers, cleaners, tutors
Why They Omit Income:
- “I don’t take a paycheck”
- “I reinvest everything into the business”
- “It’s not profitable yet”
Commonly Missed Income:
- Customer payments received in cash
- Unreported sales or barter transactions
- Personal expenses paid through the business
3. People With Irregular or Seasonal Income
Who:
- Construction workers, real estate agents, farmers
- Teachers with summer side jobs
- Anyone who receives lump sums or works on commission
Why They Omit Income:
- “I haven’t made anything recently”
- “That was a one-time deal”
- “I don’t know how to average it”
Commonly Missed Income:
- Past seasonal bonuses or lump-sum payments
- Commissions or pending payouts
- Consulting gigs or weekend side work
4. Caregivers and Informally Paid Workers
Who:
- Stay-at-home parents doing part-time work
- Nannies, caregivers, babysitters, pet sitters
- People helping neighbors with odd jobs
Why They Omit Income:
- “It’s just under-the-table help”
- “I wasn’t hired officially”
- “It’s just a few bucks here and there”
Commonly Missed Income:
- Cash payments for services
- Bartered labor (e.g., free rent for cleaning)
- Non‑reported domestic work
5. DIY Bankruptcy Filers (Pro Se)
Who:
- People filing without an attorney
- Those using free/online tools with little guidance
Why They Omit Income:
- “The form didn’t ask for it”
- “I didn’t know it counted as income”
- “I thought only W‑2 income mattered”
Commonly Missed Income:
- Alimony or child support received
- Rental income from roommates or Airbnb
- Unemployment benefits or government aid
Underreporting income can create serious problems in a bankruptcy case. Income directly affects your eligibility — if you fail to report all sources, it may appear that you qualify for Chapter 7 when you actually belong in Chapter 13.
Missing or inaccurate income can also impact the Means Test, potentially leading to rejection of your case or the need for costly amendments. In more serious situations, intentionally concealing income can be considered fraud, resulting in denial of discharge or even criminal penalties. Trustees also review bank statements and lifestyle spending closely, so any unlisted income sources are likely to be discovered and questioned.
This is exactly why working with a bankruptcy attorney like me is so important.
I’ll help you determine whether Chapter 7 or Chapter 13 is the right fit for your financial situation — and make sure you don’t accidentally leave out income that could cause delays, trigger a dismissal, or raise red flags with the trustee. My job is to catch the details that others miss, protect you from costly mistakes, and guide you through the process with clarity and confidence.
