What happens if your income shows decrease in the 6 month look back?

[Mere]

I have a question, we are planning on filing the end of this month, as I have a pending suit with Chase...My question is what happens if you had a $20,000 decrease in income in the past 6 months? Will the trustee honor the new house hold income? or do they average it out over the 6 months? Obviously, that wouldn't be fair, or work very well because the money is no longer available every month but I wanted to ask so I know what to expect.

My husband had a $20,000 pay decrease 12/1/10 and we are filing the end of January.

Thank for you help

[AngelinaCat]

Your pay stubs (sometimes called pay advices if you have direct deposit) along with your checking account ledger and your income taxes should tell the story. We were trying for a Ch13, and were only marginally qualified according to the credit counselor, when I lost my FT job. I lost that Sept. 30, 2007, and we filed Dec. 28, 2007. So the six months look-back showed my decline in income--along with my receipt from Unemployment Compensation.

I also would think that your husband has gotten a document informing him of the decrease in pay. Make sure you include that with your paperwork.

Good luck to you!

[Mere]

Thank you AngelinaCat, yes his paystub reflect the decrease, I guess I just wanted to know do they average the last 6 months, or just take it for face value. From what you said they will take into consideration the new lower income to be factored in a ch.13 plan.

[AngelinaCat]

Is there anything in writing that indicates that this pay decrease is permanent, like overtime being cut? Decrease in hours?

[Mere]

The decrease is actually do to job change, he was afraid his previous employer was going to start to lay off so he jumped and took less money.

[AngelinaCat]

So the decrease in salary was HIS choice. That *may* be a problem. If it had been a demotion or reduction in hours, that could be explained to a trustee. My FT job loss was due to my position being eliminated due to 'budget cuts'.

For DH to voluntarily leave a higher paying job for a lower paying job, that may raise eyebrows. Nor is he likely able to qualify for Unemployment, since he left voluntarily.

Make sure that you and he discuss all of this thoroughly with your attorney. You need to plan your filing well.

Keep in mind that since DH is now working on a *new* job, that he is likely on a probationary period of about six months, or so, before he is hired permanently in the new position. So you need to discuss ALL of this with your attorney. I cannot emphasize that enough.

Good luck.

[pavlikclan]

The first time my husband and I filed we were in a similar situation. He had voluntarily changed jobs and did not get his wages in writing prior to the change. What was supposed to be a 38k a year job turned into a 27k year a job on the first day. I was pregnant with our second. On the first day I told him either you go get your old job back (which he couldn't) or we are bankrupt. We had agreed to and could handle the 12k pay cut with careful budgeting. We could not handle the 23k pay cut it turned into! However, the trustee didn't even blink an eye about it however, we disclosed to our lawyer right away what had happened which possibly was why the trustee didn't say anything.

[SunshineGal]

For the income, an average of the previous 6 months will be used on the means and the current income withh be used for schedules I & J. Since we are talking about a large decrease, each month you wait will drop the average considerably so I would probably file after Feb 1st so you at least have two months at the new salary in the means test.

If Chase gets a judgment before you file, it will cost a few hundred dollars to have it vacated, it won't be the end of the world and I doubt you'll be garnished that quick.

SG

[AngelinaCat]

If Chase gets a judgment before you file, it will cost a few hundred dollars to have it vacated, it won't be the end of the world and I doubt you'll be garnished that quick.

SG

If she answers the summons, when and if it comes, she can delay proceedings, because typically she will have anywhere between 10 and 30 days--depending on her local court rules--to respond. Then the other side has that many days to respond.

When she goes before the judge she can then either Admit or Deny the debt. I would deny the debt. Make the plaintiff show definitive proof that she owes the debt. Then the judge will set a date for Arbitration where she and her attorney, and the Plaintiff's attorney work out a payment plan, etc. In our area, these Arbitration meetings only happen once a month. Depending on when that date falls, that potentially is another 30 days. If she is going to be out of town, as what happened with us, the Arbitration meeting is set for the following month--another 30 days. By that time, we had filed.

But if she ignores the summons in the first place and does not respond or appear in court on the appointed day, the plaintiff gets a default judgment, and all that potential time is lost. Creditors count on the debtors NOT appearing.

[Mere]

Thank you all for the helpful information, you guys really know your stuff. My plan is to file ASAP and hope the trustee honors the new income, as it is the real current household income, who knows...but I really don't want to get into it with Chase, I just want to get on with our lives, the stress is killing me!!!
I am going to speak with my attorney, cross my fingers and hope for the best.