New here, Hi - and Q about Xmas Bonus

[weRN2deep]

Hi, first post, been lurking, reading every word...

As for us, we are in Calif. no home, all unsecured debt 50K, sinking fast, own one semi-clunker, another truck (dh uses for bizz) hoping to reaffirm that. We don't have any assets, we are "ikea-ish" and nothing of value to take.

It dawned on me. We are planning to file BK7 in Jan 2010 (or were) and we are just shy of the median. Then it hit me I get a bonus every December (last year they gave it last week of Nov).

The trick is, I owe my employer about $2k for a loan (they bailed us out of a tight jam end of last year). Currently it comes out of my paychecks. My plan (long before thoughts of bk) was to settle up and pay off employer this xmas (it would be a break even). But then would it look like I paid one creditor before others??

Panic is setting in. Do I need to rush and file before the bonus? Then would I have to list my employer loan as a debt? (will this mean they'd find out about BK?) omg, that would be bad. Really bad.

If I wait for original plan, file in January 2010, then including the bonus would make us over the median.... can we exempt it?

What to do??... file before bonus, just shy of median, have to list employee loan (and scramble really fast to do get it done by then); file after bonus, but then it shows I paid employer off before others?

I'm so confused.

[weRN2deep]

I hope I'm not talking to myself, I do that a lot lately.

Anyway,

Further clarification of my ramble above...

"you cannot prefer one creditor over another by making payments on the debt within 90 days before filing bankruptcy (one year if the person paid is an "insider" (family, friend, etc.) If you do so, the bankruptcy court can take that money away from the person you paid. This is to insure that all creditors are treated equally. This does not apply, however, to regular monthly payments such as your car payment, house payment, rent, utilities.?"

Would employer be considered an "insider" ?

[LuciluS]

Hmm sounds like you are in a Pickle!

If I were in your shoes, I would file the BK in middle of Oct. or early Nov. US Trustee tends to stick their nose in many Over The Median Case as that has been repeated several times on this forum.

I would just have a heart to heart talk with the employer and tell him if you continue to pay him, the Trustee may come to him and ask for the money back to pay the creditors. You will need to make sure you haven't paid within the 90 day period. Yes, you are going to need to list your Employer as a Creditor and cease paying him until your case in closed.

I believe the amount is $600 to an individual in a month. Gee, if OP is paying boss $25 every two weeks, that would be 15 weeks with total of $375. I'm not so sure that would be a preferential treatment.

Somebody with more experience jump in and clarify please.

Hmmm, maybe that pickle might get sliced and fit nicely on a hamburger

[lrprn]

I believe the amount is $600 to an individual in a month. ... Somebody with more experience jump in and clarify please.

Actually the upper limit is $600 over the 90 days before filing to an unsecured creditor. More than $600 to any one unsecured creditor during the 90 days before filing opens the door to the trustee going after the money as a preferential payment. It doesn't affect the filer, but does affect the creditor because they have to give the money back in full to share among the other creditors.

The key here is if the employer loan is considered unsecured. You'll have to read the loan agreement to find out how the loan is structured.

Please go over this with your lawyer very carefully to see if loan payments to your employer could be considered payments to an insider. The problem here is that if the answer is yes, then the trustee can go back a year looking for cash transfers to seize.

And lastly, if your Christmas bonus comes before you file, ask your lawyer if it's ok for your employer to roll it over against the loan balance without you ever touching the money. That way you may be able to avoid having the cash to protect with your exemptions or spend down before filing. Best of all, that may help you avoid the added income that will inflate your gross income figures for the Means Test and Schedules. It may not be possible, but it's worth investigating the possiblilities.

[eddiep]

It is actually $600 total over three months. It does sound like you will have to talk with the boss about the loan. and yes you will have to explain any payment over $600 including mortgage, insurance, utilities, groceries etc... Thoes are either priority debt (mortage, car payment) or basic living expenses which are allowed. You can't exempt the bonus, it is income not an asset. Being under median is only one step in qualifing for chapter 7. If you are over median you will have to take the means test and if you do not have enough left over after all allowed expenses you would still qualify for chapter 7.

[weRN2deep]

Ok, sorry if I'm fresh and new on this. We have not hired a lawyer yet, we are just in the 'facing this' phase and were even talking about possibly pro se sounds like that is not an option.

So if I was to get the bonus, pay off the balance due to them and then file the bk AFTER 90 days, would that solve the problem? (not the median problem, but the paying insiders problem).

I will read the loan agreement tomorrow at work. I might just have to explain this all to them. Ugh. I know they kept a guy on staff who they found out had stolen groceries (prior to working for us)... so I think they are understanding and not the type to 'look down' their noses. I was just hoping it would fly below the radar. (the bk I mean)

[Flamingo]

With this economy, are you even certain you will get a bonus this year? I don't think you can plan on anything at this point until that bonus is actually in hand or you have confirmation ahead of time you will receive it and the amount. Many folks this years have received no raises or bonuses or raises or bonuses way less than in the past.

[weRN2deep]

With this economy, are you even certain you will get a bonus this year? I don't think you can plan on anything at this point until that bonus is actually in hand or you have confirmation ahead of time you will receive it and the amount. Many folks this years have received no raises or bonuses or raises or bonuses way less than in the past.

Good point. We were told no raises, but my boss (part owner of large corp) told me that there would be bonus. (Didn't say how much).
Regardless, we have to move out of our apt (another thing we wanted to do before filing so we still have good cred while looking). We were asked to pay first/last & depo so I would probably have $ left from that if no bonus.

But again, if we pay off my employer and wait 90 days before filing, is that doable?

[weRN2deep]

Well I barely slept last night thinking about all this and I've come to the decision to file the BK in early Nov, continue to have my paycheck payments go thru ($50 every other week). I do believe the bonus would put me over the median. So the 90 days prior, we would have paid our regular payments to the employer (total $300). That wouldn't raise a red flag, right?

Also we plan to move Nov (lease is up dec 1). We want to get into a new place before credit shows the bk. When we moved in we paid first, last and deposit. Can we use the rent that we won't be paying (since we paid) to buy groceries, etc. ?

If we have a deposit coming back, but will be needing it to secure the new place, is that a bad thing too?

[LuciluS]

Well I barely slept last night thinking about all this and I've come to the decision to file the BK in early Nov, continue to have my paycheck payments go thru ($50 every other week). I do believe the bonus would put me over the median. So the 90 days prior, we would have paid our regular payments to the employer (total $300). That wouldn't raise a red flag, right?

Also we plan to move Nov (lease is up dec 1). We want to get into a new place before credit shows the bk. When we moved in we paid first, last and deposit. Can we use the rent that we won't be paying (since we paid) to buy groceries, etc. ?

If we have a deposit coming back, but will be needing it to secure the new place, is that a bad thing too?

I think you will be okay on the payments to your employer as it does not exceed $600; therefore, you will not have to list it. Trustee will probably see a paycheck stub and can see the amount is small.

As for the deposit coming back. It's a District/State item depending on whether you will have to list it as an Asset under Deposits or not. You probably need to discuss it with your Attorney (I don't recall you saying if you had retained an Attorney). Let's just say you have to list it as an Asset. Go over your State's Exemptions and possible you might could exempt it.

If you get the deposit back before filing, then go make the deposit on your new apartment. If you haven't retained an Attorney and are planning to, NOW is the time to set up the Free Consults as Bankruptcies continue to hit an all time high; thus, Attornies are very busy.

[debtmonster]

Years back I had an employer pay me $3,000 for relocation expenses on a new job. I would not have to pay that money back as long as I stayed at the company for at least 1 year. I was there 8 months and found another company to work for since I was not getting along with the people there and fighting on a regular basis. I included this company in my bankruptcy. The guy was TOTALLY pissed off that I quit. I was like, what's the big deal? He said that he paid $18,000 for the head hunter for me to work there. I felt so bad for leaving. I had I know he paid that much money, I probably would have tried to stay longer.

Last year I had a $5,000 dollar bonus. I don't know what, if any, that I will get this year. I wanted to get filed long before December came up. I wanted the discharge to be before December, if at all possible.

[weRN2deep]

Welp, I took the plunge and got in with an attorney (recommended from a local radio guy I like) and have an appt next Tuesday.

I am going to gather all my concerns and hit'm with it then. I feel a sense of relief just knowing I don't have to keep stressing about all these little issues.

I don't know what kinda gorilla math I did the first time I plugged our #s in, but we are not under median, we are actually $500 over per month. I know that's not much so hopefully we'll know more clearly if we are even ch7 candidates.

If it is Ch13, we'll wait until the original planned Jan 2010 to go for it. If he thinks we can do 7, we'll get and go for November.

THANKS for your responses. Love this board.

[debtmonster]

Did you go to www.legalconsumer.com and do the means test and see if you can squeeze into a Ch. 7 on there?

[2manybills]

That sounds like the best plan. File before December.

For us some of our minimum payments were above $600 a month, and I paid some of our bills until about 2 months. We listed everything and nothing was said to us at our 341 last week.

When you meet with your attorney, give him all of the information and make sure they go through your particular situation with you thoroughly and give you complete answers that involve your case, not generalizations. You want them there for you when the time comes.

[weRN2deep]

Did you go to www.legalconsumer.com and do the means test and see if you can squeeze into a Ch. 7 on there?

Without putting any effort into it (I'm sure there are a lot of expenses I could come up with) I was able to get it to $80 over median. I forgot that DH's job will file him as independent contractor and we can deduct his route mileage which is $495 irs allowable per mo. write off.