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SNAP CERTIFICATION MANUAL – SECTION 5000 5100 Income – Summary 5110 Bankruptcy

5100 Income – Summary

SNAP Manual 01/01/00 This section describes income which must be considered when determining Supplemental Nutrition Assistance Program eligibility and benefit level. It explains which income is to be excluded during eligibility determination and which income must be included in the eligibility determination. Verification guidelines for this countable income are provided. Income is classified as earned income or unearned income. The household is required to report all income at the time of application and any income anticipated to be received during the certification period. All earned and unearned income received on each household member is counted as income unless the income is excluded as specified in SNAP 5400. 5110 Bankruptcy SNAP Manual 01/01/00 Filing for bankruptcy has only a limited effect on the amount of income counted in a household’s SNAP budget. However, the household’s bankruptcy papers should be examined carefully to determine if the terms of the settlement will have any impact on the household’s resource and/or deductible expenses. After a household files for bankruptcy, the gross amount of any income (earned and unearned) received by the household will continue to be counted in the budget. Sometimes, the household’s income goes to a trustee and the trustee pays the household’s bills and gives the household a living allowance. The living allowance has already been counted as part of the household’s gross income and so would not be counted as income again. When a self-employed household (including any farmer) declares bankruptcy and continues to do the same type of business, the self-employment income continues to be counted in the SNAP budget. Often when a business or farm declares bankruptcy but continues to operate, some of the assets of the business are sold to pay the debts of the business. If the business owner (or farmer) sells property or equipment used in their business and uses the proceeds to pay off a loan, the money is counted as income in the self-employment enterprise. (See Capital Gains, SNAP 5640.) Even if the proceeds of the sale are diverted to a bank to repay a loan, the money is still counted as income in the self-employment enterprise. If the household is no longer allowed to continue the self-employment enterprise, the self- employment income is dropped from the SNAP budget. When the business no longer continues to operate and business collateral is turned over to a bank, either voluntarily or through