When to file question..new here. help!!!!

[roxy]

Background: Combined income of my spouse and I= $143000
Unsecured debt=$70000

We make too much money for chpt 7, but can't afford 13, (our actual expenses are way above the allowed expenses for our area). Sooo, I'm going to quit my job to stay at home with my 2 toddlers, which we have been thinking about me doing this anyway. This will allow us to pass the means test...BUT I was thinking of cashing my 401K (stupid, I know) to live on for 6 months until we can file and until I work again after filing (about 1 year total). When I cash the 401K in, we will get about $20000 when all is said and done. Will we be able to file in 6 months? Or is this too much, too close to filing? We have 0 equity in the house and are upside down on the vehicles. We spoke to a lawyer last week, but just came up with this plan.

Thanks for any info. This is a great forum!

[keepmine]

If you know it's stupid, {your words} why would you do it?
What you need to do is, stop paying all debt you wish to discharge and use that money for HH expenses. If you still can't make ends meet then, you have a problem bk can't fix.
Don't touch the 401K. That's an exempt asset that the trustee can't liquiate.

[roxy]

It's going to be really tight without the extra money to fall back on. May have to stop paying one of the vehicles. We have 4 kids, 2 of them with chronic health issues. We never thought we would wind up in this position. If BK can't fix it, not sure what will. This is our last resort.

[Michigan1951]

I agree. Don't TOUCH the 401K ever. Since you are going to stay home, get rid of a car and the insurance on it. Interview more than one lawyer that works well with you to. And, yes, as stated above, stop making payments on the debts you aren't going to keep through bk. Stay here and keep asking questions. There are many experienced filers here that know more than I ever will for sure, but I remember them telling others to never never touch the 401K. I think because it is exempt, and if you cash in it it will be game for the Trustee to take it. Good luck...

[Guest]

Roxy - be careful about quitting your job to qualify for a chapter 7. The trustee may view this as a bad faith move. Anyone else on the forum have thoughts on this?

[keepmine]

Roxy - be careful about quitting your job to qualify for a chapter 7. The trustee may view this as a bad faith move. Anyone else on the forum have thoughts on this?

Nothing in the bk code requires you to work.
This won't be the first filer who quit a job or refused overtime in order to qualify for a Chapter 7.

[Guest]

Nothing in the bk code requires you to work.
This won't be the first filer who quit a job or refused overtime in order to qualify for a Chapter 7.

Thanks for the input keepmine. I just wondered if quitting your job voluntarily within 6 months of filing a chapter 7 would raise red flags with the trustee. I'm no expert though... :o)

[keepmine]

Thanks for the input keepmine. I just wondered if quitting your job voluntarily within 6 months of filing a chapter 7 would raise red flags with the trustee. I'm no expert though... :o)

Of course, if asked by a trustee you sure don't say you did it to qualify for a 7.
But, the Op has children with medical issues.
As for others, childcare issues, helping other family members, long commutes, dissatisfaction with your job, inability to get along with coworkers, job related stress,etc. Everyone can find a good reason to quit a job.

[jribe]

Roxy - be careful about quitting your job to qualify for a chapter 7. The trustee may view this as a bad faith move. Anyone else on the forum have thoughts on this?

no - you can quit your job for any reason. However- Roxy- how easy will it to get another job after you quit? The job market is horrible, unless you know you'll have a job in a year; i would figure something else out..

[roxy]

Thanks everyone. We are really trying to figure out what to do. Our main interest is our 4 kids and their future. This forum is a wealth of knowledge.

[backtoschool]

I was laid off in January and deliberately did not look for a new job so that I could get my income down and file for chapter 7. The trustee asked me a couple of questions at my 341 about it, but basically they cannot make you take a job.

I would not touch your 401k though. That money is exempt if it stays in your 401k.