Chapter 7 - Getting Cold Feet

[TheDouble]

Hello Folks - if anyone has time to read my sad story and give suggestions/hope I would be most appreciateive.

I am due to go and sign papers for a Chap. 7 this coming Monday and I am getting cold feet and wondering if I am doing the right thing - in a way I feel caught between a rock and hard place.

My debts are approx. $60K in back taxes - and all are dischargeable except for around $10k - besides that I have around $10k in consumer debt - only assets are some vehicles valued at around $7-8k, no house, no dependents, singe, no bank accounts, no retirement funds - I live in Oregon.

While preparing/saving money for the Chap 7 my income was well below the median - then out of the blue I got a great paying job that puts me will above the median going forward. My atty said file asap so I still come in under the median based on the past 6 months. So I will be under the median okay and he is going to ask for a Chap 7 based on last 6 months income - and get this - under Section 707(b) because my debt is primarily non-consumer debt my atty is going to say that I am not subject to the means test. This all seems way too good to be true even though I guess there are some cases like mine that have been discharged without a hitch, but I am thinking there is no way the UST is going to let that pass.

So, I am thinking it is a long shot that the UST will go for it because of what they call "The Totality of the Circumstances" i.e., I now make good money and can afford to pay - so he will push me into a Chap 13 - and if that happens I will be paying out the you-know-what because I have alot of disposable income since I was living dirt poor and had no expenses, but now am making good money, etc. I've only been on my job for 2 months and still have really no expenses to speak of.

Besides filing BK my option is to fly under the radar until someone catches up with me and starts garnishing my wages, at which time I would quit the job and go back to low wages, wait 6 months and file the 7.

If I file the 7 and they force me into a 13 I don't think I want to do it - because I can't bear the thought of being a slave to the UST and the court system, having the government in my business and asking permission on how to spend my hard-earned money, etc. Seeing $1000+ go out of my paycheck for 3-5 years would be too much for me to handle - I seriously would go crazy working hard to see my money go down the drain.

The thing is when/if I file I will expose myself to all my creditors and they will all be at my door anyway so I would have to quit my job to keep them from milking me dry.

I am almost tempted to postpone filing, fly under the radar as I said for as long as possible - save up some money, quit working when someone finds me - which might not be until next year when my company sends in the w-2's - and then "get poor" again and file at that time - a year or so later.

Sorry if I am going in circles - I am just wondering if I am doing the right thing here - my attorney seems confident about filing under section 707(b) - the no means test, that we will be successful - but at the same time he always throws in the "but, you know, the UST can say that "based on the totality of the circumstances..." and force me into a 13 which I probably will not along with. He said that if I back out of the process, later, if I go to file again they will be less inclined to discharge because they will say I am manipulating the system...who me?

Thank you for reading.

[TomJ1]

You'd quit your job to file bankruptcy??!? Are you kidding? That's exactly like cutting off your nose to spite your face. Yeah you'll screw your creditors but you'll screw yourself too. You don't get unemployment if you quit a job. What are you going to live on when you do this?!? Man, I can't believe someone would do that.

[wayne-o]

listen to your attorney thats why your are paying him

[manglicmot]

If your attorney wants you to file asap, then do it now, don't delay.

Quitting your job in order to put yourself under the median sounds like a bad idea to me, personally I would not do it. In my own case I was borderline, I decided I would file, I decided I wouldn't file, then finally decided I would file. If I had my druthers, I would not file, period. If my income was above median, I would just go ahead and pay my creditors. If you are already behind and subject to late fees, etc., contact them and negotiate. If you tell them you are considering chap 7, they may become more flexible.

Bottom line is this, quitting a job to bring your income below the median in order to file BK is not a good idea. Either file now while your six month average is below the median, or negotiate a plan with your creditors. It'll be a hard decision to make, but maybe your attorney has the right answer for you right now.

[CATCHMEIFYOUCAN]

Quitting job

Quitting your job in order to put yourself under the median sounds like a bad idea to me, personally I would not do it. In my own case I was borderline, I decided I would file, I decided I wouldn't file, then finally decided I would file. If I had my druthers, I would not file, period. If my income was above median, I would just go ahead and pay my creditors. If you are already behind and subject to late fees, etc., contact them and negotiate. If you tell them you are considering chap 7, they may become more flexible.
Bottom line is this, quitting a job to bring your income below the median in order to file BK is not a good idea. Either file now while your six month average is below the median, or negotiate a plan with your creditors. It'll be a hard decision to make, but maybe your attorney has the right answer for you right now.

I quit ONE of my jobs just so I could CONVERT to Ch7 and fall below the median ! ! ! I had 2 full time jobs when I filed which threw me over the median and into a possible Ch13 prison for 5 years. But I guess everyone's situation is different! And I didn't have to wait another 6 months to prove my income would fall as it just dropped half when I quit my job. The cool thing was (and I know I read somewhere your probably not soppose to) BUT I immediately picked up poooop loads of overtime on top of gambling wins at the casino and still going strong as if I had another full time job the day I quit my day job and stuck with my night job. The Trustee never asked for additional bank statements or paystubs. Yeah I took a risk BUT ...

Catchmeifyoucan !

[petrified]

you should file now....the irs is not something (someone?) to delay for long.

Bite the bullet and do it now.

Your attorney is correct that you do not need to complete the means test (neither did I).

Enjoy the new job and in about 4 months or so you will have no more worries.

P

[TheDouble]

Thanks to everyone who responded.

You might have misunderstood my post - I would not quit working altogether I would just go to a job that would be sure to put me under the median income and file for a 7 when I meet all the criteria - sort of like catchme did.

Don't get me wrong - I am not trying to "screw" anyone. You have to understand that my original IRS debt is something like $25k, but with interest/penalties it is up to $64k! I tried an offer in compromise with the IRS a few years ago due to hardship - both my wife and I were unemployed, she was battling breast cancer without medical insurance, and we were living on her SSI - as you might predict the IRS didn't accept my offer. I guess they would rather squeeze the life out of me than accept what I could afford to pay - and now, hopefully, they will get nothing. Eventually I was able to work again at a low paying job and was planning on the Chap 7. Then, out of the blue, I got the high-paying job and I am happy and grateful, but I am 3 years behind on my life. I am in my 50's and have exactly 0$ saved for retirement. I have no assets except for a few vehicles. I have gone without any luxuries whatsoever and dealt with my loved one battling a serious medical condition that sucked up all our money.

We all have our reasons why we are here - I will never again judge anyone who has to consider filing, or has to file bankruptcy - no matter why we are here we are just here and God's way is to forgive.

Petrified - thanks for your reassurance - I guess I am just analyzing things way too much. My atty. seems confident about the no means test but he always adds the disclaimer "It depends on the trustee...", etc. To me, it seems like the law is the law - either my debt is a majority of non-consumer debt (which it is) and I am not subject to the means test, or I am. I would rather that I knew the rules going in rather than having to rely on the mood of the trustee on a given day and rolling the dice.

Petrified - I will look at more of your posts to see if I have a similar situation as you did - unless you would care to elaborate a bit more?

Thanks again

[SinkingFast]

http://www.thebklawyer.com/thebkblog/

You may get thru perfectly fine. Just be aware, there's a possibility you might not. Based on the result of Schedule I, Income, vs Schedule J, your actual living expenses. If you can show less than $100 there, you should be OK.