Change of focus

[Scottowl]

Today I learned the position I have held for the last 8 years is being eliminated within the next 2 months.
Of course, I can downgrade and stay working. That privilege comes with a 7% pay cut, and 12 hour days.
I am 63, and have been at the same company for 38 years. The 'new' position is physically demanding, and I have doubts I can hang in with it.
I am seriously considering pulling the plug, and resigning. Retiring, actually. I would have an income of 2250/mo.

I would not be able to afford any feasible repayment plan.

Would I be able to convert to Ch 7 under these circumstances, even though I did not originally pass the means test?

I do still have some tax debt, and mortgage arrears that are non-dischargeable. There are also 2 vehicles under contract which can go back to their actual owners. I may decide to surrender the house as well.

In my case tax debts are under 10k, 6k without the mortgage. I would surrender the vehicles. Everything else is unsecured.

[Carmella]

Hi Scottowl The past week I been thinking about you and now here you are posting.

I am sorry to hear about your job. I HATE when jobs pull crap. One hospital I worked at gave nurses shifts they could not work due to family obligations so people would end up quitting vs the hospital laying off people and making the front page about lots of lay offs...

It sounds like you are weighing your options and as always check with your attorney to see what all your options are.

If you go the route of Chapter 7 then you might be able to get another job, less stressful/lower paying to supplement your income or even a job that might have health benefits until you are eligible for Medicare, but even when you are eligible there's costs for Part B coverage and/or "gap" supplemental insurance.

I don't know enough about the taxes if they would garnish or if you can set up a reasonable payment plan.

I really think you need to consult with your attorney and find out what your options are including going to Chapter 7 vs continuing working this job or a getting another (most likely low paying job).

I am assuming you do not have any savings (like a lot of us). Is the $2250 a pension you can collect or social security (which is I know is lower amount if you are not full retirement age)? You won't be eligible for Medicare until you are 65, you may need to go the Cobra route for insurance which isn't cheap. I don't know enough about other insurance options with the "marketplace" or what the income requirement is for Medicaid products and that will vary state to state.

I wish you the best and keep us updated as you find more information about options.

[justbroke]

Today I learned the position I have held for the last 8 years is being eliminated within the next 2 months. Of course, I can downgrade and stay working. That privilege comes with a 7% pay cut, and 12 hour days. I am 63, and have been at the same company for 38 years. The 'new' position is physically demanding, and I have doubts I can hang in with it.
I am seriously considering pulling the plug, and resigning. Retiring, actually. I would have an income of 2250/mo.

Sometimes we need to slow down and think more about our health than the job. I'm changing careers after 35 years.

Would I be able to convert to Ch 7 under these circumstances, even though I did not originally pass the means test?

It depends on the district on whether you can simply convert. Some districts want a new Means Test and Schedule I/J, whereas others want you to have qualified at the start.

I do still have some tax debt, and mortgage arrears that are non-dischargeable. There are also 2 vehicles under contract which can go back to their actual owners. I may decide to surrender the house as well.

Many decisions to make. Perhaps, if you have some equity, you can get a modification.

In my case tax debts are under 10k, 6k without the mortgage. I would surrender the vehicles. Everything else is unsecured.

Not extremely bad ($4K in mortgage arrears). I would hope the bank would work with you if you convert. I would not, however, reaffirm the mortgage if I converted to a Chapter 7 unless it was mandatory and it fit the budget (with the arrears modified).

[flashoflight]

I don't have any definitive answers 13 vs 7/staying vs retiring, but you have way more house saving options by staying in the 13 and your job than going to a 7 and retiring.

If the most recent 12 trustee payments and most recent 12 post-petition mortgage payments are on-time (<29 day late or less) and minimal lates on the last 24 months, you can do an FHA chapter 13 refi which will shed the arrearage and you will have a new clean mortgage with no default/foreclosure baggage. If you have a ton of equity, you could even buy out the 13 with the refi and then retire with no overhanging debt and still save the house.

[Scottowl]

I did read up on SS over the past 2 days.

As far as I can tell, you have a limit on what you can earn per year if you are under FRA.
Although I have exceeded that, I am on a month to month basis for 2021 only, beginning the month I begin benefits.
The wage limit before penalty is 1500$/month, rounded down slightly.
Pension income is not considered income; only wages or business income are.

Insurance will be perilous for 18 or so months until I hit 65. I am in no position to afford COBRA.

Interesting point about refinancing. I do not believe I have any equity, but I have been behind on both court payment and mortgage payment, due to missing work because of illness, and a dash of my own stupidity.

I suppose it would be impossible to sell while still in 13? The presently insane housing market may allow a little more than what I owe.

My attorney did not mention any problems qualifying for Ch 7 on a reduced income, although there will be a fee involved.

I have been on the fence for so long on this house. I would have to make a permeant decision at the time.

[flashoflight]

Scottowl How about ACA plans? You should be able to qualify with a large subsidy to defray your premiums and copays if your income drops to $2250/month. Without a subsidized ACA plan, I don't think you can afford to retire. So let's pretend you have a subsidized ACA plan based upon $2250/month.

I think you need to order a payoff statement from the mortgage lender's bankruptcy department to see where you really stand. Have the payoff sent to your attorney, who should forward it to you. Compare the payoff with recent similar comps within a mile rather than zillow. Then compare a hypothetical mortgage (30 or 40 year at current mortgage rates, not the original rate) with rent. If you can get onto one of the Covid forebearance programs, you might want to gamble on getting a forebearance loan mod after you have retired. But you need to make enough to make a reduced mortgage payment which could be a 40 year and thus reduce your monthly mortgage payment even with the arrears. The reduced payment loan mods are probably going to require proof of reduced income which is why this is going to be a gamble after you do the 7, retire, and collect your first month of Social Security. If you fail to get the loan mod via Covid forebearance, you'll get foreclosed upon but there is no deficiency due to the 7 since you are not going to reaffirm under any circumstances. As before with the ACA, if you cannot afford market rate rent or a modified mortgage, you can't afford to retire.

[Scottowl]

Another good tip about ACA. I tried to find prices online, but kept getting the run around.
For now I am going to stay off work to get my foot/leg diagnosed and treated. I have been dragging it around too long now.
If my company doesn't like it they can completely flush me.
I feel like a piece of scrap paper that was wadded up and used for 3 point shot at the garbage can. I am sprawled out on the floor, awaiting final disposal.

[Scottowl]

Well, after calming down and putting some thought into this, something occurred to me.
If I were to leave now, I would have SS and private pensions as income.
Are these sources judgement-proof?

If so, my thought is to either leave now, or go back to work until the mortgage and taxes are paid down some more. Maybe another 6 months or so.

At that time, what if I just allowed my plan to be dismissed?
I know I would have to take care of taxes and mortgage, but what about the secured vehicle loans? They can repossess, but will undoubtedly say I owe more than they are worth.
Would this deficency then become unsecured debt, also judgement-proof?

I figure I have time left for only one bankruptcy discharge. Why not save it, if I can?

[justbroke]

If I were to leave now, I would have SS and private pensions as income.
Are these sources judgement-proof?

Social security would be "collection proof." Whether or not a private pension is protected would be based on your State's non-bankruptcy laws.

If so, my thought is to either leave now, or go back to work until the mortgage and taxes are paid down some more. Maybe another 6 months or so.

Many people continue working to paydown a mortgage or to get it to $0.

At that time, what if I just allowed my plan to be dismissed?

I would rather see a hardship discharge -- or conversion -- than let is dismiss. But that's me. I worry that the creditors, and JDBs, would come out the woodwork despite any the ability to collect on a judgment. Also, you must consider whether your home is also not subject to lien from judgments.

I know I would have to take care of taxes and mortgage, but what about the secured vehicle loans? They can repossess, but will undoubtedly say I owe more than they are worth.

Would this deficency then become unsecured debt, also judgement-proof?

That's the question. People aren't really judgment proof. Some people are collection-proof based on the type of income. You would need to determine if your private pension is not subject to levy (protected) in your State.

I figure I have time left for only one bankruptcy discharge. Why not save it, if I can?

Consider conversion.

Just my thoughts.

[Scottowl]

Many people continue working to paydown a mortgage or to get it to $0.

Here is my dilemma. I won't be able to stay at it much longer. I'm already hurting, and now these head games at work are downright depressing. My goal would be to make it to the first of the year. That's a stretch.

The conversion would be the best choice. I could do piece work here and there without looking over my shoulder.
Some research sources say the pension is 'collection proof' until it hits the bank account. Game on after that.

I am behind on the court payment for June, and it will soon be July. This is all due to lost wages from illness.
My attorney advises me that I should expect difficulty if it gets to 3 payments late, although it is possible to put the missed months on the end of the plan.

All in all, I should not have been in Ch 13 in the first place. It was just my dumb luck to file when my income was at the highest point. One should never count on 5 years on the job, especially at the tail end of your career.

One attorney (not the one I hired) suggested I invent some dependents to pass the means test.
"Don't you have some cousins living with you? Can you move an Aunt or Uncle in temporarily?"

[justbroke]

One attorney (not the one I hired) suggested I invent some dependents to pass the means test.
"Don't you have some cousins living with you? Can you move an Aunt or Uncle in temporarily?"

Run, do not walk from that attorney. And that's all I have to say about that.