Section 3.41 Income

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

H. (§3.41) Income

In most cases, an individual debtor’s income from personal services rendered postpetition is not property of the estate. 11 U.S.C. § 541(a)(6). This is different than an interest in property acquired by the estate, which does become property of the estate under § 541(a)(7). In reorganization cases, however, such postpetition earnings in Chapters 12 and 13 are explicitly made property of the estate under 11 U.S.C. §§ 1207(a)(2) and 1306(a)(2). Other than from an individual’s personal services, postpetition income is implicitly included in a Chapter 11 estate because 11 U.S.C. § 1108 authorizes the trustee (in most cases the debtor-in-possession, 11 U.S.C. § 1107) to operate the business, and § 541(a)(6) specifically otherwise includes proceeds, products, offspring, rents, or profits of or from property of the estate. See §3.11 above regarding Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109-8, 119 Stat. 123, inclusion of an individual Chapter 11 debtor’s earnings as property of the estate.

When the income is derived from something other than earnings for services performed, its status will depend on whether it may be classified...