Met with Attorney Yesterday- Have some ?s

[mixer99]

My pre-BK meeting was yesterday. Liked the attorney and her paralegal. They have been doing this for about 20 years, and they were very calm and took all the time I wanted. So, I am going to use them.

After doing the means test, I would be paying about $800 a month for 60 mos in a chp 13 case, but they suggested that my wife resign immediately and we could qualify for chp 7 in six months.

I think we have decided to wait six months and file the 7 since we are 100K in cc debt, have a failed rental house of $2k per month that will go into foreclosure in the next 3 to 4 months, etc.

In exchange for paying for most of their chp 7 fee upfront, the attorney has even agreed to field my collections calls and 'stall' them for 6 months, which I thought was a nice gesture.

Anyway, my question goes to verification of income- How exactly does the trustee do this? I understand that I present my tax returns, paystubs, and bank statements, but honestly, what is to keep my wife from getting a physical paycheck, cashing it, and putting it in a shoebox until the 6 mos is up? Or doing contract work where no taxes are taken out and they just 1099 her in January 09?

I have explained the importance of resigning to her, but I know my wife will not do well sitting on her hands for 6 mos, and it may take a couple of pay periods for her to be able to transition her job to another.

Thanks in advance for any thoughts.

[parsoc48]

My pre-BK meeting was yesterday. Liked the attorney and her paralegal. They have been doing this for about 20 years, and they were very calm and took all the time I wanted. So, I am going to use them.

After doing the means test, I would be paying about $800 a month for 60 mos in a chp 13 case, but they suggested that my wife resign immediately and we could qualify for chp 7 in six months.

IIn exchange for paying for most of their chp 7 fee upfront, the attorney has even agreed to field my collections calls and 'stall' them for 6 months, which I thought was a nice gesture.

Anyway, my question goes to verification of income- How exactly does the trustee do this? I understand that I present my tax returns, paystubs, and bank statements, but honestly, what is to keep my wife from getting a physical paycheck, cashing it, and putting it in a shoebox until the 6 mos is up? Or doing contract work where no taxes are taken out and they just 1099 her in January 09?

I have explained the importance of resigning to her, but I know my wife will not do well sitting on her hands for 6 mos, and it may take a couple of pay periods for her to be able to transition her job to another.

Thanks in advance for any thoughts.

Mixer,
I'm glad you found an attorney you like and trust, that is SO important. Not sure if it's 'nice" of them to field your creditor calls...I was told that with my first small payment toward the total fees that I had retained him and could start referring calls to his office.
Assuming your wife leaves her job soon, why would it take 6 months to qualify for a 7? I've heard that phrase on this forum a lot, just wondering.
Other people more knowledgeable will be able to answer your other questions, but I would think that hiding income is fraud, as well as lying under oath at your 341 meeting.
Good luck!

[mixer99]

Mixer,
I'm glad you found an attorney you like and trust, that is SO important. Not sure if it's 'nice" of them to field your creditor calls...I was told that with my first small payment toward the total fees that I had retained him and could start referring calls to his office.
Assuming your wife leaves her job soon, why would it take 6 months to qualify for a 7? I've heard that phrase on this forum a lot, just wondering.
Other people more knowledgeable will be able to answer your other questions, but I would think that hiding income is fraud, as well as lying under oath at your 341 meeting.
Good luck!

Hi there...yeah, I agree with you, and I'm trying to control my wife LOL...Just trying to get the facts.

The reason about 6 mos is that they look at your last 6 mos of income. Right now, that includes my wife's job and her twice monthly deposits. 6 mos from now, my bank statements will only show my income since she will be unemployed and they will only use my income for the means test....which I already pass per the attorney using my debts and only my income.

[emoney]

Are you gaming the system? The trustee can ask why she quit and what are her prospects for returning to work.
What is your answer now?
If your wife can work she should. Just look at the benefit you are already getting by playing by the rules.
regards,
emoney

[diviaruba]

Voluntarily leaving employment in an effort to "game" the means test is cause for a trustee objection under totality of the circumstances, and will garner the attention of the U.S. Trustee when they compare your prior years' tax returns with what is on the B22. Also, your "SoFA" (Statement of Financial Affairs - Form 7) has a 2 year look back period.

I am mystified as to how the Means Test has acquired such a "bright line" aura by some on these boards, as well as other attorneys. It is merely one of several hurdles one must pass, none of which are ipso facto dispositive, in order to be accorded relief under the statutes.

Your other "solution" is out and out fraud, and would subject you to very severe financial and criminal penalties.

[keepmine]

I'd not push my luck and have my wife quit and then work under the table.
In the unlikely event a trustee did ask why she quit, I'm sure there are childcare issues, aging parents, conflicts with coworkers, job related stress, long and expensive commutes,etc. You get the picture.

[mixer99]

Thanks for the replies everyone, both harsh and kind. I know everyone has strong opinions of all of this, and I truly do appreciate the views and thoughts.

I have recontacted the attorney's office and told them to work on my file and give me the best possible scenario chp 13 payment based on all legal and actual expenses. If the payment is somewhere between 5 and 7 hundred, I will probably do it...heck, I am paying 3 grand a month in CC debt right now....that would be a 2500 break!

Here's another question- How do you pay for student loans during a chp 13? Are they rolled into the plan along with everything else or are they paid in some special way outside the plan? I have approx. 28K in SL debt and my wife has about $750.

[monkatom]

I believe student loans are put in arrears (sp) and you do not pay them during a 13 but they continue to accumulate interst until after you're 13? Could someone else please chime in.

[Cali]

Mixer,
I'm glad you found an attorney you like and trust, that is SO important. Not sure if it's 'nice" of them to field your creditor calls...I was told that with my first small payment toward the total fees that I had retained him and could start referring calls to his office.
Assuming your wife leaves her job soon, why would it take 6 months to qualify for a 7? I've heard that phrase on this forum a lot, just wondering.
Other people more knowledgeable will be able to answer your other questions, but I would think that hiding income is fraud, as well as lying under oath at your 341 meeting.
Good luck!

My attorney told me the same thing, we paid 50% upfront and the rest will be paid next month. I've been referring all calls to them.

[lrprn]

...heck, I am paying 3 grand a month in CC debt right now....that would be a 2500 break!

Good way to look at it since the latest Ch 13 court decisions are leaning toward looking not only at past income but at future income as well. Just quitting for six months isn't going to cut it unless you luck out and get an extremely lazy trustee. Ask your lawyer about the latest Ch 13 future income case law decisions and see what he says.

Here's another question- How do you pay for student loans during a chp 13? Are they rolled into the plan along with everything else or are they paid in some special way outside the plan? I have approx. 28K in SL debt and my wife has about $750.

If your Ch 13 payment leaves you with sufficient extra money to do so, then it is possible to continue making payments on student loans throughout your Ch 13.

Check with your student loan lender about this. Even if all you can afford is to pay the interest, at least you won't emerge from Ch 13 owing all the interest plus the original amount owed when you filed.

[FreshLikeADaisy]

Mixer, from what you wrote I honestly think a 13 would be a good fit for you. As you say, your wife could keep working, the payments would actually be a huge break for you on a month-to-month basis, it will get the creditors off your back, and -- best of all -- once you file a 13, you can convert to a 7 at any point your circumstances change and you qualify for a 7. Your wife might not want to quit today (and you already know it would be dishonest if she did, I know you do ) but who knows? Maybe a year from now you'll have a kid, or a parent to take care of, or an illness that necessitates time off, whatever. So if you file 13 today and you can afford the payments, I *don't* think you've lost a thing, but gained a lot.

Ah well, just my opinion. Good luck!!!