Quitting Job to Qualify for Chapter 7

[boiler704]

I've been debating whether to file chapter 13 for some time and have finally made the decision to stop paying my CC. This is the first month of not paying. For 2006 i made ~60k and stand to make around 70k for 2007. This puts me over the means test for NC and forces a chp 13. I currently have around $75k in unsecured CC debt and would be looking at a huge repayment plan because i live cheap.

lately I've been thinking of stocking up the money saved from not paying the CC and then quitting my job to go work for a non-profit making below the means test to qualify for a chapter 7. Then after a year or so go back to the corporate world. I have no assets that I would be worried about being possesed.

My question is would the bankruptcy court question why I left my job? If not why haven't other people simply quit working to qualify for chapter 7? Other then ethical/moral reason.

[HRx]

I've been debating whether to file chapter 13 for some time and have finally made the decision to stop paying my CC. This is the first month of not paying. For 2006 i made ~60k and stand to make around 70k for 2007. This puts me over the means test for NC and forces a chp 13. I currently have around $75k in unsecured CC debt and would be looking at a huge repayment plan because i live cheap.

lately I've been thinking of stocking up the money saved from not paying the CC and then quitting my job to go work for a non-profit making below the means test to qualify for a chapter 7. Then after a year or so go back to the corporate world. I have no assets that I would be worried about being possesed.

My question is would the bankruptcy court question why I left my job? If not why haven't other people simply quit working to qualify for chapter 7? Other then ethical/moral reason.

Most people don't quit thier jobs, because they still have other bills that need to be paid each month. rent, childcare, health insurance, food, electricity, etc. It's hard to say if the courts will questions your job loss---they may, or may not.

[HHM]

The trustee's generally don't question job loss or moves. However, if you go this route, you still need to be able to pay all your bills, WITHOUT turning to credit while you're earning the lesser salary. So, if you can live on a reduced salary for nearly a year. i.e. six months before filing, and 3 months to get your chapter 7 discharge.

Most people don't go this route because they can't take a lower paying job and still make ends meet. In addition, for most people, switching job isn't that easy and there is no guarantee the higher paying job would be their when the time came.

[Runnin on empty]

We are in a similar situation, don't mean to hijack the thread, but since it is somewhat the same, I figured it might not be worth an entirely new thread. We are about $12K over the median for our state, but that is with 3 incomes. We've been contemplating cutting it down to 2 incomes, as it is really taking a toll on the family life and my overall health. As it stands right now, we are able to pay the bills, and some weeks we have more left over than others. Obviously leaving any of the jobs (probably the 3rd one - a night/weekend job) will put us below the median, and we will no longer be able to pay the bills as they are currently. I'm just very tired and frustrated right now, not sure what to do and don't know where to begin. We were hoping to wait until September when my son starts kindergarten as that would mean a big savings on daycare, but that may be too far away.

1 - Will the trustee find fault in us wanting to move to a two income household? I've been doing this for longer than I care to admit and I'm not sure how much longer I can.

2 - How long after the 3rd income is dropped would we need to wait to file so that our new adjusted income would be considered?

3 - Depending on the answer to #2, how would that play out? Say you need to wait 4-6 months after losing that job to have the income counted at the point to which you could file. Creditors would surely start coming after us long before then, and we'd have no recourse to protect ourselves because we wouldn't have the automatic stay of bankruptcy.

4 - How would they determine if we were elligible for Ch 7 or 13? Is it if you have more than $100 expendable cash at the end of each month after all 'approved' bills are paid that they do this? Don't get me wrong, I am not opposed to giving something back to our creditors, but the thought of having to have each and every financial transaction approved through the trustee before proceeding with it for 5 years is a daunting task.

[SinkingFast]

CatchMeIfYouCan originally filed Ch 13 while working 2 jobs. Quit one job and converted to Ch 7 upon the advice of a BK Judge, no less!! Here's a link to CMIYC's timeline thread:

http://www.bankruptcyforum.com/showthread.php?t=11976

Evidently, the BK Court does not "require" you to work 2 jobs.

[LostOne0069]

boiler704 - quitting your job and then filing bankruptcy could be touchy... you might get away with no questions asked... and you might get a trustee who decideds to ask, "why did you change jobs"... now, they don't really have any way to check up on your answer, so you could probably lie here and say, "I was about to be layed off and so I found as good a job as I could find".... but it could be scary... quitting and then filing bk smacks really dangerously close to "fraud"... IMHO, so I'd be really, really careful if I were you.

Runnin on Empty: don't worry about it... if the court doesn't have a problem with a one income family... why would they have a problem with a family with 2 incomes? I mean, its' not like you're quitting the 40 hour a week, $20/hour job in order to keep the 8 hour a week, $8/hour job... I doubt that any trustee or judge would even ask... but if they did you could just say that your health was suffering due to the stress of 2 jobs and that your performance on your "main" job was being affected by the stress and it was a case of quit the part time job or risk getting fired from the full time job... which even if not specifically true at the moment... if you're really that stressed about it, it's probably more true than you know. Just relax, take a deep breath and realize that everything is going to be OK. It's only money... you're healthy and are able to be gainfully employed... without the debt, 2 incomes for your family sounds like you'd be doing good... I know it's hard to just "let go" of that stress... we did the same thing for years... and now that we're one day past our "last day to object" date... it's an incredible feeling of freedom and relief.

Sorry, I'm rambling again.

Bottom line, relax. You're not talking about doing anything that is going to be looked down on. You're going to be OK.

[tradewiz50]

People wonder why they changed the BK laws. Prime example is what the OP is trying to defraud the system.

[Spartan]

Yep. Nothing seems to suggest hardship. He just doesn't want to repay his CC debt.

BK is for HONEST debtors who have fallen on hardtime.... It doesn't seem how that fits the scenario here...

[boiler704]

my rent/utilities run about 700/month. On top of that i'd say maybe 300/month for food and 500/month for general other. This means i'd need 1500/month or 9k saved up to get through without worrying about the basics. I could get through it pretty easy as I have stopped paying my CC and am now banking about 1500/month and will be receiving 5k+ extra next month as a result of bonus/tax return.

Under old law I could easily file for chapter 7 as my only asset is a 96 grand prix. If I go chp 13 I'd be paying 1500/month to the courts for 5 years. I don't believe it qualifies as fraud because when I advanced the money to gamble I did have a good job and am able to pay it back. Now that I stopped gambling I want to restart my life by working for a company I believe in (non-profit) or join the peace corp.

Who says I have to work a job because it pays the most? And how is it fair that just because you make a certain amount you don't have to pay anything back? Or how is this any more fradulant then buying a new car before filling so your expendable income is lower. Just because I drive a cheap car and don't spend a lot why should I be penalized more than someone who spends more monthly but makes the same?

FYI . . . I'm still not sure what i'm going to do but thanks for the feedback.

[GoingDown]

In my opinion this is NOT fraud at all. Quitting one job and getting a new job for six months before filing BK is simply following the rules as they were set out by congress.

It's really no different than waiting 90 days after making credit card charges or cash withdrawls before filing BK. BK is like a game and you have to know how to follow the rules-- as set out by congress-- to get the debts discharged. They keep changing the rules and we keep changing our strategy.

If no one could ever change jobs because it might upset some creditor it would be like financial slavery. It would be ridiculous!

Besides, if a trustee questions you about it, you could simply say that the better paying job was too stressful for you to handle and it was causing problems for you. How would the trustee prove otherwise?

[Spartan]

my rent/utilities run about 700/month. On top of that i'd say maybe 300/month for food and 500/month for general other. This means i'd need 1500/month or 9k saved up to get through without worrying about the basics. I could get through it pretty easy as I have stopped paying my CC and am now banking about 1500/month and will be receiving 5k+ extra next month as a result of bonus/tax return.

Under old law I could easily file for chapter 7 as my only asset is a 96 grand prix. If I go chp 13 I'd be paying 1500/month to the courts for 5 years. I don't believe it qualifies as fraud because when I advanced the money to gamble I did have a good job and am able to pay it back. Now that I stopped gambling I want to restart my life by working for a company I believe in (non-profit) or join the peace corp.

Who says I have to work a job because it pays the most? And how is it fair that just because you make a certain amount you don't have to pay anything back? Or how is this any more fradulant then buying a new car before filling so your expendable income is lower. Just because I drive a cheap car and don't spend a lot why should I be penalized more than someone who spends more monthly but makes the same?

FYI . . . I'm still not sure what i'm going to do but thanks for the feedback.

If you see fit to ask the questions above, then you wouldn't understand the answer.

I did notice some interesting election night conversion.

From.....

"....I've been thinking of stocking up the money saved from not paying the CC and then quitting my job to go work for a non-profit making below the means test to qualify for a chapter 7. Then after a year or so go back to the corporate world...."

to.....

"....I want to restart my life by working for a company I believe in (non-profit) or join the peace corp...."


hmmm... ok... don't forget to send us a post card, from whereever the Peace Corp sends you..

[Spartan]

I am not going to waste further breathe on this. The system allows this to occur. So be it.

[GawVa]

My wifes health was in decline which was a factor in her not working any longer , then we ended up filing because money was way to tight.

My advice wait the 6 months if possible unless you absolutly fall below the
median income , we had to file prior to the 6 month period and her income for a couple months pushed us over the mediun by a small amount which triggered the possible abuse ordeal. That caused more questions from the trustees wanting to know why we filed 7 when income showed a 13 and it was only like 1000 or 1500 bucks over the mediun. Long story short we answered the questions gathered a few more documents and the trustee aggreed we are able to file 7 and dropped the presumption of abuse from our case.

Wait if you are over on income and get a couple nights of better rest
Feb 5 or 6 we should get a discharge