Filed C-7...just got hired on with a significant salary increase

[trenen]

Hi,

I just filed for C-7 yesterday. When doing this, I filed making $32k. Along with my filing yesterday, I was informed that I was hired for a new job to start next week...but it bumps my salary up to $42k!! I was not anticipating this change, and after estimating my finances I might be looking at a surplus of a little over $1k/month. Can someone please clarify if this will indeed affect my C-7 filing? My understanding is it won't because it's a C-7 and only the 6 months prior to filing are observed. I need some input on the issue. I'm waiting a response from my attorney, but thought I would get some other sides too. Thanks!

[daylate]

From what I understand if the trustee asks at the 341 if anything has changed and I believe that is pretty much a standard question, you will be obligated to mention this. Also as the detectives on my favorite TV shows are fond of saying "We don't believe in coincidences". While not doubting that you filed and then found out about the job, it seems like the timing is so close that a trustee will likely have a problem. Worse situation would be if you didn't disclose and you were selected for random audit by US Trustee and they found the increase. That could be problematic and might be considered fraud. Bottom line if somehow this gets into the record it will kick you into a Chapter 13 based on the excess of Schedule I over Schedule J.

Hopefully the more knowledgeable folks around here will chime in, but from my paranoid perspective you have a significant challenge to overcome. Definitely make sure your lawyer fully explains this to you.

Good luck.

[october99]

They will likely ask you to bring your most recent pay stubs to the 341. They may ask to see them, they may not. They may ask if there have been any changes in your income since you filed, they may not.

There is something called the totality of circumstances that allows them to look at the change since filing and take it into account. I've read that this can happen, but I've not read of it actually happening too often.

I would talk to your attorney and see what he has to say. Congrats on the new job!

[meateater]

Congrats on the raise!

Sounds like while substantial, the raise won't put you over the income limits to file Chapter 7. How big are your debts? It may very well be that even if this raise had materialized before you filed, it would not have made a difference in your ability to pay off your debts. From my own experience, when I filed chapter 7, I was $900 short each month just to make minumum payments on everything. Even if I'd gotten a $10K raise, I still would not have been able to make minimums, much less pay off the debt.

[justbroke]

Can someone please clarify if this will indeed affect my C-7 filing? My understanding is it won't because it's a C-7 and only the 6 months prior to filing are observed.

The bottom line is that the Panel Trustee (Tee) is likely to ask the standard question if anything financially or in relation to your job, has changed. If you answer yes, they Tee may probe more. However, the person who would motion to dismiss for "totality of circumstances" is the United States Trustee (UST) who is an entirely different person than the Tee.

Yes, it may cause some issues, but I'm thinking that you may still be under the median, and, additionally, the UST is not even interested in your case and probably won't show up at the 341 Meeting of Creditors.

It is true that the Means Test is based on a lookback of 6 months, but the UST's power to dismiss for changes in circumstances goes beyond the 6 month lookback. As someone else stated, the UST tends to look for people who have "timed" their bankruptcy so that a bonus or new job won't be looked at in the "lookback" period, but certainly don't "deserve" a discharge in a Chapter 7.

The likelihood of this affecting you is minimal, but be honest. Speak with your attorney and follow his/her advice.

[trenen]

Thanks everyone for the responses. To clarify the situation, even after the raise, I am still under the $47k limit for a single filer as well as being married, $60somethingK. The timing was not planned, in fact it was inconnvenient, obviously. I was a contract worker for 3 months and hiring was a possibility, but not guaranteed. In the event that I would be hired, such a large increase in compensation was definitely not expected. Additionally, my contract isn't up for about 2 weeks, so they jumped the gun on the process early. When I first told my attorney last night, I don't think he realized the amount of the increase or the amount of money that would be left over. He told me at one point I could land an $80k job the day after filing and it shouldn't matter. He did say that things like winning the lottery or recieving an inheritance before the 341 would cause problems. I've debated on seeing if my soon to be employer would hold off the raise for a bit and just continue paying me what I am currently getting until after the 341. Any additional bites someone would like to share?

Btw, the debt looking to be liquidated is about $25k, not including a continuing increase of $40k in student loans accuring ( still in school). I have no assets either. In general, my case is very boring. In research it sounds like the UST wouldn't even make an appearance because of those reasons.

[ValleYum]

You mentioned having 1k per month 'left over' due to the raise - is that from your Schedule I & J (Income and Expense)? Did you and your attorney discuss how that would be handled?

[trenen]

You mentioned having 1k per month 'left over' due to the raise - is that from your Schedule I & J (Income and Expense)? Did you and your attorney discuss how that would be handled?

I did not plug anything in last night. I got my excess from a rough calculation I did, which was not including the colletions I would pay without the BK. I was doing an "after the fact" calculation.

Edit:
After doing another generic calculation (with a calculator, not the forms), with current collections taken into consideration (and not including 2 outstanding accounts not being paid yet, one of which would 100% result in a summons because it's the same group that has already given me one for another account), I would have roughly $564 left over. If I were to 'guess' my payments for the two outstanding accounts and take those into consideration too, my remaining balance of excess funds would be about $264 or less. Obviously, at that amount, I'm sure there are ways to spend that money in bills or something. I don't know...and my attorney has not responded yet. Completely on edge right now.

[justbroke]

Do not be on edge. Just relax and forget about "worrying" about the scenarios. You will probably go under the radar. It is what it is at this point and no worrying is going to fix it.

(And just to be thorough, you can never include an expense to pay "unsecured" debt on your Schedule.)

[tcreegan]

Hi trenen,

The raise is not going to affect the means-test, that is a fairly strict 6-month lookback from filing date. And even with the raise you are still under median income. The means-test is taken care of, not an issue.

What matters now is Schedule I minus Schedule J = your post-BK disposable monthly income. Otherwise known as DMI. Over/under/median/ none of that matters here. Make sure you include all possible expenses on Schedule J so that your DMI is less than ~$150 Should not be a problem, your attorney probably has a checklist or questionaire to fill out.

You can also do a search on the forum and find where other people have posted their Schedule J expenses, give you an idea of what Schedule J is like.

Congratulations on the raise!

Tom in Colo ....fellow Coloradoan here, Hi neighbor!

[trenen]

Hi trenen,

The raise is not going to affect the means-test, that is a fairly strict 6-month lookback from filing date. And even with the raise you are still under median income. The means-test is taken care of, not an issue.

What matters now is Schedule I minus Schedule J = your post-BK disposable monthly income. Otherwise known as DMI. Over/under/median/ none of that matters here. Make sure you include all possible expenses on Schedule J so that your DMI is less than ~$150 Should not be a problem, your attorney probably has a checklist or questionaire to fill out.

You can also do a search on the forum and find where other people have posted their Schedule J expenses, give you an idea of what Schedule J is like.

Congratulations on the raise!

Tom in Colo ....fellow Coloradoan here, Hi neighbor!

Hello neighbor

Thanks for the information, that makes a lot more sense now. My attorney contacted me today, it appears that the way around this dilimema was simply making a new list of expenses that includes payments I would want to make post BK that I was never able to have before because of budget restrains in the past. I guess he has worked with the trustee and says that he is fairly empathetic and so acquiring new things like insurance and paying interest on deferred student loans should keep me in the clear. I'm gonna keep pushing on and waiting for the 341 in a month.