What would you do and why? File in Sep or Oct?

[gman]

I am looking for ideas on the pros and cons in my situation of filing on Sep 1 or Oct 1.

Here are the facts to consider:

* I am unemployed as of early July.
* Because of this - I am filing a Chapter 7 and not a 13.
* If for whatever reason the Court denies my Chap 7 - I CANNOT CONVERT TO A CHAPTER 13 WITH NO WAY TO PAY IT.
* I may or may not qualify for the MEANS TEST on Sep 1. Why? Well my income for the 4 months between Mar - Jun was well over my state median. I have had little income since (unemployment benefits.)
* I also have 2 expenses that could be fought by the Trustee. One is my rent which is $400 over the IRS allotment. To counter this I have a signed Custody Agreement requiring that I live in my current school district. I am the primary custodian and my ex lives in the same neighborhood as me.
* The other expense that may be fought is a $25k judgment on a credit card that I am putting down as a monthly "payment" of $25k/60 months = $416/mo.
* If EITHER if these gets denied - I will not pass the Means Test until Oct 1st. Once Oct 1 rolls around - passing the Means Test would be a slam dunk even if both expenses were tossed out.
* The reason I might not wait until Oct 1 is simple: I am trying to find a job! If I find one before the BK 341 meeting - I might end up in a Chap 13 and I simply have no desire to go that route. Why? I have no assets to protect AND have been told by many lawyers that since I make commission income it is tough for people like me to get a Trustee to accept a 13 plan without "regular" income.
* I have over $200k in unsecured debt - so this is a big decision.

WHAT WOULD YOU DO AND WHY?

Also - what would happen if I filed on Sep 1 - the Trustee objected to either of the above expenses at the 341 hearing [assume that hearing is in early Oct] and I still do not have a job when he/she objects? Can I go to the 341 and ask to modify my income down even LOWER since I would have made no income in September assuming I did not land a job?

This Means Test is like Chinese Math!!!

Thanks to all who chime in!

[Maine]

?

This Means Test is like Chinese Math!!!

LOL!
You need to wait until October. The credit card judgement will not count toward expenses because it will be wiped out in ch7. The extra rent will not count on the means test- housing expenses on means are only the allowed irs standard. You will be able to use the actual rent on your schedule J.

Also- If you are still in the "trying to find a job" stage you will probably not see an income increase for most of september even if you find one soon. 2 weeks to interview. 1 week to start date, 2 weeks to first paycheck. Even if you got a call tomorrow you would probably be fine.

It is sad, you can not go to your 341 and tell them to lower your numbers, you can tell them you are unemployed- use your unemployment income on the schedule J, and you must tell them if you get a job- they will want details, but lowering your means numbers after filing is not done. You would have to re-file to do that.

Good luck!

[gman]

LOL!
You need to wait until October. The credit card judgement will not count toward expenses because it will be wiped out in ch7. The extra rent will not count on the means test- housing expenses on means are only the allowed irs standard. You will be able to use the actual rent on your schedule J.

My lawyer seems to think there are Court opinions where we could get the excess in rent due to the "special circumstances" of having to live in this school district per the custody agreement.

He also thinks the credit card judgment will fly because they cured the lien on the judgment.

Candidly, I think both only have a 50/50 chance of passing the sniff test.

Also- If you are still in the "trying to find a job" stage you will probably not see an income increase for most of september even if you find one soon. 2 weeks to interview. 1 week to start date, 2 weeks to first paycheck. Even if you got a call tomorrow you would probably be fine.

In the scenario you listed above, I would start my new job AFTER I file but BEFORE my 341 hearing. I thought this was a no-no?!?! Am I OK here because this is a 7 and not a 13 and the question of employment might not arise?

It is sad, you can not go to your 341 and tell them to lower your numbers, you can tell them you are unemployed- use your unemployment income on the schedule J, and you must tell them if you get a job- they will want details, but lowering your means numbers after filing is not done. You would have to re-file to do that.

Good luck!

The whole "do you have a job now" question at a 341 hearing seems a tad unfair. I thought when you filed it was a snapshot of your current situation, yet asking that question is searching for information AFTER the snapshot. If I cannot increase expenses or lower income on my filing at the 341, why is it that a Trustee can increase my income via a new job????

[Fallonedward]

"The whole "do you have a job now" question at a 341 hearing seems a tad unfair. I thought when you filed it was a snapshot of your current situation, yet asking that question is searching for information AFTER the snapshot. If I cannot increase expenses or lower income on my filing at the 341, why is it that a Trustee can increase my income via a new job????"

I have always wondered about this myself. The hubby has been looking for a new job for 5 months and if he is still unemployed when we file and then secures a new job before the 341 that does not seem fair that a judge could put us in a 13...ugh so much to worry about

[tcreegan]

job market

Hi gman,

Given the job market, how likely are you to find an over-median paying job in the next two months?

If I were you, I would be betting on this question instead of the means test expense exceptions.

Just my 2 cents, probably all its worth....

Tom in Colo

[catleg]

I would work to ensure that I filed ch7 as below median.

Everything will go much smoother for you then. All the means test garbage and IRS limits go out the window.

What's the story with the judgment? If you're renting why are you even making payments on it?

[gman]

What's the story with the judgment? If you're renting why are you even making payments on it?

The judgment has not yet been collected - but I when I regain employment I am at risk for a 25% garnishment that would literally last for years until all 25k was paid in full.

I also think it could be applied to any significant asset I may purchase in the future.

Does this change my timing decision???

[catleg]

No the judgment is irrelevant to a Sept vs October decision.

In fact, if any garnishment were to take place, any monies taken from you within 90 days of your bankruptcy filing would have to be returned to you assuming you had enough exemptions to cover them. This is the flip side of preferential payments. Otherwise they would be redistributed to your other creditors equitably.

But really, sit tight. As a below median filer you have more leverage, as an above median filer, life is not so good.

[wnguyen]

I would put it off until Oct 1 or if possible beyond that. I was trying to wait as long as I could. Since you're trying to find a job, it might take some time. From now until Sept 1 is just less than 2 weeks. Since now you don't have a job, you don't have income so whoever won on the judgment can't collect any $$ from you (unless you have funds in your bank accounts).