Is my paycheck income, or is it an asset?

The answer to this question might surprise you. Because most paychecks are delivered into the employee’s hand a week after the end of the payment period, between the end of that period and the time the employee actually receives the paycheck that income to be received actually represents an account receivable for the employee. As a result, that paycheck should be included as an asset in their bankruptcy case. Most of the time it doesn’t matter because the debtor usually has enough room in their permitted exemptions to allow for that upcoming paycheck to be kept without having to give the money to creditors. Also, most trustees really don’t have the heart to force a debtor to turn over their paycheck when they’re struggling to make ends meet. However, some trustees do read these provisions literally and will consider that one paycheck to be an asset of the bankruptcy case that has to be collected from the debtor and paid to creditors. That’s why it’s important to keep a close eye on the exemptions that are available and the timing of the bankruptcy case.