forced early retirement and future earnings decides chapter 7 or 13?

[Kristy12]

My company is offering an early retirement package to those of us who are 60. The message is, take it or risk getting fired later with nothing. I live in an at will state.

The company has already fired a bunch of people younger than us old-timers, to reduce payroll, so we see the writing on the wall and feel it is best to take the early retirement package and leave with something.

Does anyone know if I can use this situation to my advantage in filing either 7 or 13? My current wages are a little bit higher than the state median, but since I'll be unemployed after taking the package, my earnings will be a lot less. Would the courts let me take chapter 7 because of my low future earnings, or will I have to take chapter 13 due to my current wages?

Thank you for any advice you can offer.

[tobee43]

we were in a situation that one of us was offered an "early" out, however, as an incentive, they brought you up 5 years in salary level, and then gave you your retirement amount based on that amount. we actually since we no longer had to contribute to the pension which was a heffy amount, ended with $8 more a week! LOL!

we were both in the same general situation as you, i lost my six figure position, so we were both our of a job when we filed.

when we went to file our total incomes were based on SS, (one of us hit the age at that point) a pension and unemployment insurance. now, depending on the atty, most tried to put us in a 13, because between all of those and, i must add these were considered and are EXEMPT incomes, (the pension was exempt in this state if it was police, firemen or teachers), SS was exempt, UI was exempt in our county, however, not the county next to us, (go figure), however, the bottom line is the income between this all was fairly high. my argument with those attys trying to push us into the 13 was what happens with the EI stops??? we can no longer make those payments as that income is gone. well, we would have had to incur yet MORE legal expenses to go back to court to convert from a 13 to a 7.

my advise to you is wait it out if you can. take the package and file when your income is lower file, we did, and it worked out fine for us. (actually we left the state and waited 2 years to file because we wanted to take advantage of this states wildcard exemption), otherwise we would have had to file federal bk and used those exemptions. we made out better sitting on our hands and waiting it out.

if it were me, i wouldn't take the risk unless you feel the total amount you would draw from unemployment insurance out ways the package they are offering. i know that would depend on which stlate you are in...example, the state we are in now, only the employers contributes to EI (that i understand has or is changing), whereas where we came from we collectively worked between the two of us 90 plus years and had contributed a substantial amount to our EI. (that's why one of the atty's trying to push us into a 13 was shocked to hear what we were collecting), however, we couldn't make it clear to him it was that much because of what WE had contributed. so, you have some things to think about. in our case we got both the pension (early out) and the unemployment insurance....and ss.

best of luck, it will all work out for you

[keepmine]

My company is offering an early retirement package to those of us who are 60. The message is, take it or risk getting fired later with nothing. I live in an at will state.

The company has already fired a bunch of people younger than us old-timers, to reduce payroll, so we see the writing on the wall and feel it is best to take the early retirement package and leave with something.

Does anyone know if I can use this situation to my advantage in filing either 7 or 13? My current wages are a little bit higher than the state median, but since I'll be unemployed after taking the package, my earnings will be a lot less. Would the courts let me take chapter 7 because of my low future earnings, or will I have to take chapter 13 due to my current wages?

Thank you for any advice you can offer.

What will the package consist of? A lumpsum payout or, an annuity.
This will make a difference because you may not have enough exemptions to protect a large case settlement.
A lot will depend on your state and, if you can shift non exempt assets to exempt assets {aasuming you're going to get cash}.
I've looked at a couple of your posts and I think if the board is going to be able to assist you we'll need to know what state you'll be filing in.

[LadyInTheRed]

I think if the board is going to be able to assist you we'll need to know what state you'll be filing in.

Click on any username, click on "view profile", then go to the "about me" tab. If they provided the information and allowed it to be viewable, you'll see what state they are in. Kristy12 is in Iowa.

[catleg]

Check if you already qualify for a ch7, in spite of being over median, you may have enough expenses to qualify.
Chapter 13 is really not desirable except for saving a house or dealing with very bad tax problems.
It's really a last resort, since it puts you in a financial penalty box for a long time, too long in my opinion.
It is supposed to be based on projected income so you should be able to account for your lower income on sched I/J even if you fail the backward looking means test.
Also some of your retirement income sources may be exempt.

[AngelinaCat]

We are in Florida. We were trying for a Ch13. I was employed full time with a PT job, and 'Hub was semi-retired and doing consulting work for the fair city I was employed at FT. When I lost my FT job, 'Hub also lost the consulting job. We had no choice but to change our plans and go CH7.

Good luck to you.

[tobee43]

such an excellent point keepmine! a lump sum could be cumbersome and it will make a difference. that actually was my point about unemployment insurance as well, if the total sum of the unemployment equals higher than the amount of the buyout package i would do the unemployment route. now, i do understand in some states unemployment benefits are small amounts however, states like nj and ny are quite substantial. i.e. lets say nj would pay you 24k a year...a total of 99 weeks actually. does your amount of unemployment exceed the your package, this is just an example.

[Kristy12]

Excellent advice. I believe that legally, the company can off one a cash lump sum payment, which would be subject to income taxes, or offer to deposit the same amount into the employee's already established company 401k or 403b. That amount deposited would not have taxes taken out.

I have to look up the unemployment rules in my state to see how much I might qualify for, and for how long. I might not even qualify for unemployment benefits as I would have to prove my voluntary early retirement was taken because my job would be eliminated in the future. This is the rub.

[tobee43]

now a 401 would be excellent and exempt! and, i'm wondering since it would go in an 401 or 403b that wouldn't be considered wages and maybe still be able to get unemployment insurance?????