Income between filing and the 60 day club

[nerves]

What happens to the income earning from the time you file until it is all over with? Does the trustee take control of your money?

[Calthius]

Any income made after you file is yours. Unless you get a windfall, such as winning the lottery, winning big at the casino or huge inheritance.

[southernbelle]

When you file chapter 7 the court takes a snap shot of your finances at that time and like the other poster said unless you win the lottery the TT will basically leave you alone. I had a 2nd job after the 341 and it never raised an eyebrow. If your case is straight forward the TT won't look at any additional financial information regarding your case.

[nerves]

Thank you so much. I have been looking on the web for this answer and haven't found anything. We haven't filed yet but probably will within the next week or so. We have a business that has failed due to the ecomony over the last year and it has been h e double hockey sticks.

[justbroke]

Unless you get a windfall, such as winning the lottery, winning big at the casino or huge inheritance.

This is inaccurate in a Chapter 7 context. The only "windfalls" that are included in your bankruptcy estate, after filing, are inheritances, death benefits paid to you as a beneficiary, and property as part of marital dissolution, that are received or you are entitled to receive within 180 days of filing.

In some very remote instances -- because winning the lottery is just phenomenal -- the U.S Trustee (UST), not the panel Trustee, may claim that the circumstances have changed and file a dismissal for "totality of circumstances". However, the Trustee is not entitled to that money as property of the estate. This is a very very important distinction, because that would mean that the Trustee would be entitled to keep the lottery earnings, and they can not. However, they could seek to dismiss under a "totality of circumstances".

Please note, that even getting a high paying job just days after filing, can get you a dismissal for "totality of circumstances". (There is plenty of caselaw on the high paying job just after filing and before the 341 Meeting.)

What specifically is property of the "estate" is specified in the Bankruptcy Code (11 USC 541), and virtually all property that you receive after filing, is yours and not subject to the Trustee's liquidation powers.

I will end with this. The UST usually won't do anything about new income after filing the petition. However, if it's significant, s/he is within their power to ask for a dismissal for "totality of circumstances". Some USTs don't really care, and others are specifically looking for people who time their bankruptcy to take advantage of loss of income, or a new job starting.

I would just say... proceed cautiously.

[aljohnson007]

Good advice.

[AngelinaCatHub]

JB, so what you are saying is, if I understand, is it depends upon timing, as well as amount. Make it simple for my simple mind. 'Hub

[justbroke]

JB, so what you are saying is, if I understand, is it depends upon timing, as well as amount. Make it simple for my simple mind. 'Hub

Timing is everything. If you go into the 341 Meeting and are asked if your financial status changed, such as did you find work?... that would change the whole dynamics.

I was reading a case where the debtor filed for Chapter 7 after having been unemployed for a while. I can't recall specifically, but he either got a job just before filing or just after filing, with IBM and at a really great salary. The UST moved to dismiss for "totality of circumstances" although the person's CMI and Means Test showed that there was no presumption of abuse.

There are just factors which also play into this. In another thread here on the Forum, a poster (can't remember who) stated that they had obtained a part time 2nd job, and the Trustee didn't care.

[nerves]

Thank you for the additional information. I was just wondering what happens to the pay from my existing job. If anything, the pay would decrease before it increased

[CCsAreEvil]

I was reading a case where the debtor filed for Chapter 7 after having been unemployed for a while. I can't recall specifically, but he either got a job just before filing or just after filing, with IBM and at a really great salary. The UST moved to dismiss for "totality of circumstances" although the person's CMI and Means Test showed that there was no presumption of abuse.

The paralegal said I could get a job anytime after filing since I was so under the means test.. but I'm still playing it safe until after the 341 Meeting, just because I'm paranoid like that.

[CCsAreEvil]

Update from my 341 meeting from last Friday.

I wanted to search for/get a job after my initial filing, but I read enough on this forum to wait after my 341 meeting (even though the paralegal said I could go ahead and get work before my 341). I'm glad I waited.

In my case, I did get asked "have your income/financial circumstances changed?". I said no and that I'm still unemployed. Then, that was it.

But now after the 341 meeting, I'm actively looking for work.. horrible time to, however. I've been out of work for a year now and the economy is pretty bad right now. But, at least this BK is mostly behind me now. Gonna be tough explaining being out of work for so long.

[justbroke]

I am glad to hear that you made it through unscathed! Welcome to the 60 Day Club!

[Klesko]

The thing that drives me crazy is how the law which is federally written with some state exemptions is used differently in almost every district. I see it as the law is the law and UST or TT who bend, interpret or even just ignore it should not be allowed to, but they get away with it too much.

I can understand exemptions being slightly different per state. But everything else is the law and should be followed exactly from one district to another.

[justbroke]

The thing that drives me crazy is how the law which is federally written with some state exemptions is used differently in almost every district. I see it as the law is the law and UST or TT who bend, interpret or even just ignore it should not be allowed to, but they get away with it too much.

Ahh, but it isn't so simple. First, you must remember that the panel Trustee only makes about $25 per case unless s/he finds some assets to liquidate. That is why they don't spend too much time on cases. It's also not the Panel Trustee who brings forth dismissal actions... it's the United States Trustee (UST)

As for dismissals, likewise, the UST is buried in cases and can only spend so much time scrutinizing them. That's why they have thresholds for determining whether a particular case would warrant a closer examination. For that reason, and that reason only, being under the median income, allows one to fly under the radar (but doesn't mean they'll get a free pass always).

You have to think of this like the criminal justice system. Not everyone gets caught. Resources are thin. Resources are applied where you (as UST / prosecutor) think there are more issues (whether for political reasons or for most impact).

The fact is, that if the UST finds that you are now working after you file your petition, it will be treated the same in every District, depending on it's impact to your case. If you were unemployed before filing, then get a job that still puts you under the median... the new job means nothing.

Trust me... the UST would love to catch people who play the "underemployment" and "employment timing" games! It's not called the Bankruptcy Abuse Prevention and Consumer Protection Act for nothing. There are even mechanisms in place for concerned individuals to make complaints about people gaming (or abusing) the system.

[60dayPanic]

Kid's Social Security

After we filed and before our 341, I applied for Social Security. Stupid, now I know, but too late. The Social Security I get is no problem because it just replaces the suppliment I will loose almost evenly. The problem is my kids each get 50% of my SS now too. At the 341, we were asked to amend our Schedule I to reflect what has changed. Can they dismiss our Chapter 7 because of the SS our kids will get? The kids will only collect for about 18-24 months.