going part-time to qualify for ch7

[soon2bbk]

It is looking like I will eventually need to file for bankruptcy if my financial condition does not improve significantly in next 9-12 months. I have tried repeatedly to get my home refinanced to reduce the burden, but the lender has no interest in doing so. The house is underwater so simply sellling is not an option. I have been using CC to make ends meet, but I will eventually run out of available credit.

What would happen if I game the system and went to my employer and asked to go part time, so that my salary would be under the median. At same time start a home business as the justification for the hours change. Then 6-8 months later, should the home business not succeed, file for BK?

Would I qualify for Ch7? Would the trustee or courts be able to force a ch13 in case my employer offers me fulltime employment again, or somehow put provisions in that if I go back to full time they will can revaluate or something?

yes, i have some ethical concerns, but I have no guilt about sticking it to my mortgage lender and the credit cards(same company). they had an opportunity to help but refused.

[researchnerd]

With so many people unemployed or underemployed these days, I think it's insane to voluntarily give up full-time work. There's no guarantee you could go back to fulltime, and you might end up losing your job completely. Believe me, I understand being frustrated with your lenders, but I think you might end up screwing yourself in this attempt to screw them.

If you are truly in trouble, you may qualify for Ch7 anyway -- it's not just about being below median, there are a lot of other factors that go into it. Run your expenses through a means test calculator and see where you end up. If you can't qualify for Ch7 with your current income, Ch13 is not a bad way to go.

[soon2bbk]

thanks researchnerd,

i share your concerns about not getting back to fulltime or worse.

i did have a preliminary consult with a bk lawyer. even though i pass the means test for ch7 ( really high mortgage payment ) He says they will most certainly push for ch13 due to my income being significantly above the median, by invoking the "abuse" clause. And from what I understand, the trustee will expect me to live within the means of the median income, and for the most part expect all income above the median will go to the creditors.

if that is true, there is little point in returning to full time until after the 5 years are up, right?

Assuming the job security is an acceptable risk, are there other "gotcha's" ?

[ryan]

Soon2bk, we may be heading to another recession or a deeper version of what we remain in now....so it's a big risk to cut your income intentionally..what if you aren't able to go back to full time later?...can you live with that?

[epiphany]

Others have already made good comments about such a decision so I won't repeat them. To answer your original question:

No one is going to trace back and ask you why you are only making X. No one is going to ask you if you gave up a job or reduced your hours etc...so it is just about the bottom line for the last 6 months for most people. I've really always found that curious but it is what it is. Lots of people "plan" their bk months in advance.

Good luck to you.

ep

[keepmine]

You won't be the first person around here who turned down OT or arranged to work reduced hours to get thir income down.
As others cautioned, be careful about messing with your job just to file bk.

I'd suggest another consult or 2 with other lawyers. You also won't be the first who had a lawyer tell them they couldn't get a Chater 7 discharge but a different attorney made it happen.

[researchnerd]

If you have a really high mortgage payment...how will you survive on part-time income? Or are you considering walking away from your house?

[bluediamond2077]

I went part time 19 hours a week to get back into college after my debts got out of hand and I couldn't do anything but pay the min and charge living expenses . I don't plan on filing for a while as i'm living on student loans and will be for at least 3 more years. I also transfered a $7000 piece of land out of my name and need to wait 2 years due to that. I think you should only step down if your in a crappy job like I was in cashiering at home depot. If your making good money and love your job I think youd be best with CH 13

[nc73]

Do what you gotta do that's all I'll say...