Legal Definitions - surplus earnings

Surplus earnings refer to the portion of an individual's or entity's income that remains after all necessary and reasonable expenses have been accounted for and paid. This excess amount is often considered disposable income and may be subject to legal obligations, such as debt repayment, increased support payments, or other financial distributions.

• Example 1: Bankruptcy Repayment Plan

  Imagine an individual undergoing a Chapter 13 bankruptcy reorganization. Their monthly income from their job is $4,500. After carefully calculating all their essential living expenses, such as rent, groceries, utilities, and transportation, their total necessary monthly outgoings amount to $3,000. The remaining $1,500 ($4,500 - $3,000) represents their surplus earnings. A bankruptcy court would typically require this amount, or a significant portion of it, to be paid monthly to their creditors as part of their court-approved repayment plan.

• Example 2: Child Support Modification

  Consider a non-custodial parent who has been paying a fixed amount of child support for several years. Recently, they received a substantial promotion and a significant salary increase at their job. Their personal living expenses have not changed proportionally, meaning their disposable income has grown considerably. The additional income beyond what is needed to maintain their established reasonable lifestyle constitutes their surplus earnings. If the custodial parent petitions the court for a modification, these surplus earnings could be a key factor in increasing the child support payments to better meet the child's needs or reflect the parent's improved financial capacity.