Does it ever make sense to quit working?

[jdcat]

Hello all I have a few questions. Before I ask away I'd like to provide some background info. My hubby and I together make just enough to cover our living expenses plus cc payments during the months when my income is high enough. My schedule at work is dependent upon work load so some weeks I will work as much as 30 hours and other weeks as little as 12 hours. We never know what my schedule will be from month to month.

My hubbies pay is almost enough to cover living expenses, we're about $12 short which is something that can be absorbed by cutting a bit on groceries. My income is used to pay our monthly cc bills. Some months I have enough and some months I do not. When I do not have enough I dip into our grocery money and make up for the difference by purchasing what groceries we need on credit. We know this cannot continue, we're just digging a deeper and deeper hole.

If we were to file bk, which we'd like to do in March, would the trustee look at my income as possible funds for a ch 13? Without monthly cc payments we would be doing much better. Not as well as we'd like still, but better. On top of this one of our cars will be paid off in June which would then give us a future DIM of anywhere between $750 to $1276 a month depending on the hours I work. The car payment is just over $400 and my pay fluctuates between $350 and $876 gross monthly.

The thing that gets me about all of this is that the way things stand now if we were to not file bk and keep pouring my paychecks into these cc's yes we'd have an extra $400 a month after the car is paid off, but we need that money to live on. I'd keep making minimum payments with my pay and use the $400 to live off. The money we put out now on living expenses is not what we need but only what we can afford. We're aren't eating as well as we were when my hubbies hours were up at work, before his pay got frozen, and things started going south. We're a family of 5 with additional furry mouths to feed also. Gas and animal care is coming out of our grocery funds because we don't have the funds to include those two things into our budget. Some weeks we have only $65 to feed all of us.

Sorry, got to venting and got side tracked there. We won't be seeing an attorney until after the first of the year. We'd like to stop making cc payments in December. I'm thinking about leaving my job when we cease making the cc payments. My pay is all going to cc's anyway. We can make it on hubbies pay if we're really careful and barring any major catastrophe's. I'm worried that my pay, plus the cash freed up by the car being paid off in June, will be seen by the trustee as DMI and he/she would take it. Then we'd be in the same boat we're in now.

I've read that trustees take into consideration the future financial picture of the filer. I am so paranoid that my working will actually be something that will wind up being a set back for us in all of this even though my working is only helping us keep our heads above water.

Is quitting a job for these reasons fraud? I'm trying to protect our financial future and do what's best for us, and getting bumped into a 13 would not be for the best.

We have no assets other than a little bit of equity in our 100 year old house that should be covered by the homestead for Indiana, two cars that should be protected by the Indiana wildcard, and my hubbies 401k. We are about $17k under the median income.

I'm wondering if I'm being overly paranoid and creating scenarios in my head that are unreasonable?? I'm just trying to be careful, but maybe I'm worried over nothing?

I just don't want to do anything that could jeopardize our case, such as being accused of fraud. I seriously see no need to keep working if my pay will either be sucked up by cc's or be used to fund a 13 though. I want to get ahead for once, not live like this for another 5 years in a 13.

[tjs1970]

you could get fired on purpose........collect unemployment for 99 weeks and not necessarily have to count that income in the calculations under the social security act?

anyone have any thoughts on this?

HHM?

[jdcat]

That scenarios is a no go tjs. My boss never never fires people. If he wants to get rid of an employee he cuts them down to four or five hours a week and the employee usually ends up quitting because of it. Plus my boss is my neighbor and has been super kind in the hours he allows me to work. He lets me come in in the morning after the kids start school and I get off just in time to pick them up from school, there is nowhere else in town that would hire me on with those hours. I'm a hard worker and am fond of the store and the people I work with, I think he'd be very surprised and disappointed if I quit. But I think it may be best for us. I've thought of asking him to lay me off but the owner of the business has a strict policy of never laying off or firing so he doesn't have to pay unemployment. I'm sort of stuck on the unemployment front.

[BobMango]

I don't think it would be considered fraud to quit a job simply to pass the means test. They would have to prove that's why you quit and I think that would be difficult. People quit jobs all the time for lots of different reasons, (long commute, hostile workplace, hours interfere with family needs, etc).

Why don't you run through Schedules I andJ yourself and see how it comes out? I think you'll find that there are probably lots of allowable expenses available to you that you are not taking now because you can't afford them. Do a search on allowable expenses in the forum and you'll get lots of ideas. Good luck.

[justbroke]

you could get fired on purpose........collect unemployment for 99 weeks and not necessarily have to count that income in the calculations under the social security act?

There are only a few States that have any caselaw making "unemployment" insurance payments as part of the Social Security Act (SSA). The overwhelming majority of Districts show that unemployment insurance payments are not part of the SSA act and are therefore, part of the "current monthly income" definition in 11 USC 101!

Also to your point on "purposely" getting fired. As someone who has consulted to Unemployment Insurance Agencies (UIA) for several States... be careful. If you get fired for cause, you will not get unemployment insurance. The only way to collect unemployment insurance is to be laid off, have a reduction in hours, fired for incompetence or job performance or the employer simply doesn't respond to the UIA's request for condition of job separation.

Is quitting a job for these reasons fraud? I'm trying to protect our financial future and do what's best for us, and getting bumped into a 13 would not be for the best.

It is not considered fraud, but the United States Trustee (UST) can look at Abuse and/or Totality of Circumstances (11 USC 707(b)(3)) and determine that you have the ability to earn, and you chose not to. Yes, this can be difficult to litigate for the UST, but they have done this before and have won.

Voluntarily quitting a job so that you qualify for Chapter 7 "may" be considered an abuse of the Bankruptcy Code. Consult with a qualified attorney to discuss how you could do this and under what circumstances you should consider it.

As to your specific job, I think quitting a 12 hour a week job is insignificant in the grant scheme and would probably not be considered abusive. Especially if another spouse is working and the non-working spouse is maintaining the household (especially with school-aged children). The Trustee asked me about why my wife didn't work... and I told him because she's at home with the kids. He never asked another question about that.)

[jdcat]

Hi Bob-

See, that's something I don't understand. If we claim allowable expenses that we cannot afford and our DMI then comes out in the negative (-$200 a month or more for us) would that then protect my income?

I don't understand all of this because these allowable expenses that we could claim will not show up anywhere on our bank statements or anything. We haven't been using them so how can we claim them when there is proof that we haven't been living by those standards?

If claiming them would protect my income though I'm all for it.

Thanks for your reply.

[justbroke]

I don't understand all of this because these allowable expenses that we could claim will not show up anywhere on our bank statements or anything. We haven't been using them so how can we claim them when there is proof that we haven't been living by those standards?

They are allowances. You get the full amount. You don't have to prove it. The only time you need to provide proof, is when you exceed an IRS Allowance, and only when exceeding is allowed.

For example, there is an expense category for Non-Mortgage/Non-Rent expense. That expense category covers utilities (gas, electric, water) and basic phone service. If your utility expense exceeds the category (as mine does/did), then there's another line where you can claim Excess Energy Costs! However, you must provide bills/receipts to prove that amount you claim over the "allowance".

[jdcat]

Thank you justbroke! I think it all just clicked for me. The allowable expenses apply to our situation after bk also, so when the trustee is looking at our future income those standards still apply? Correct? So if I filled out all of the info for the means test and came out as -$1600 a month (which I did on the nolo site, we live in a Chicago suburb so the allowable expenses are kind of high) then that is what the trustee will look at when considering our future income? So quitting my job would actually put us even more in the negative which is obviously overkill.

These allowable expenses are set in place to allow people to still bring in a reasonable income *and* seek relief from debt? So we are ok if I keep working?

[justbroke]

Thank you justbroke! I think it all just clicked for me. The allowable expenses apply to our situation after bk also, so when the trustee is looking at our future income those standards still apply? Correct? So if I filled out all of the info for the means test and came out as -$1600 a month (which I did on the nolo site, we live in a Chicago suburb so the allowable expenses are kind of high) then that is what the trustee will look at when considering our future income? So quitting my job would actually put us even more in the negative which is obviously overkill.

Yes and yes.

These allowable expenses are set in place to allow people to still bring in a reasonable income *and* seek relief from debt? So we are ok if I keep working?

They are put in place so that everyone is compared equally. So the person who makes $200K a year gets the same treatment as the person just making over the median income for their State. A level playing field, so to speak.

Here's the downside... your Plan may actually be infeasible if you're at a significant negative amount. Making it worse, some Districts require a minimum dividend to the unsecured creditors (a few of them require no less than 10%).

Since you're way negative, something has to give... understand? While you could get a Plan confirmed with a negative DMI in the thousands... the question would be, just how will you live? This brings up the point of whether your plan is feasible. You must be able to pay the Trustee fees, your Attorney fees, and any debt service (on secured and priority debt) in your Plan... and have enough to live on. If your DMI (disposable monthly income) is going to be (negative) -$2000, then there's a problem with feasibility.

[jdcat]

Here's the downside... your Plan may actually be infeasible if you're at a significant negative amount. Making it worse, some Districts require a minimum dividend to the unsecured creditors (a few of them require no less than 10%).

Since you're way negative, something has to give... understand? While you could get a Plan confirmed with a negative DMI in the thousands... the question would be, just how will you live? This brings up the point of whether your plan is feasible. You must be able to pay the Trustee fees, your Attorney fees, and any debt service (on secured and priority debt) in your Plan... and have enough to live on. If your DMI (disposable monthly income) is going to be (negative) -$2000, then there's a problem with feasibility.

But would that apply if we would be filing chapter 7? As for paying for attorney/court costs we'll be using our tax return in Feb/March.

[justbroke]

But would that apply if we would be filing chapter 7? As for paying for attorney/court costs we'll be using our tax return in Feb/March.

In a Chapter 7, they usually don't care that your disposable income is negative, unless you're reaffirming debt. In Chapter 7, you're generally shaving off a bunch of debt, so the disposable income doesn't mean anything accept for the purposes of pushing you to a Chapter 13 if it's over $109- $182.50 a month.

[jdcat]

Thank you for answering my questions justbroke.


If we do stop paying our cc's in December then that would give us an extra $500 a month to live on. That sounds like alot but when it gets broken down weekly and by what's needed it's really not a whole lot because we have been living way under the allowable amounts by far. Then when we file in March and we claim the allowable expenses, not all of them mind you, we would then sort of even out when it comes to DMI.

Once again justbroke, thank you! I have alot to think about and some figuring to do.

[hindsight]

I would make an appointment for a good bk attorney. Probably a couple. If they are good they will give good advice for the future and planning for your bk. And between now and then you will have more questions......

[jdcat]

Thank you hindsight.

I wish we could retain an attorney now. I'm worried about stopping cc payments in December without the advice of an attorney beforehand. December through Feb/March is a long time to go without making cc payments and not having the support of an attorney.

[BobMango]

Thank you hindsight.

I wish we could retain an attorney now. I'm worried about stopping cc payments in December without the advice of an attorney beforehand. December through Feb/March is a long time to go without making cc payments and not having the support of an attorney.

I'd say that's actually not a long time to go without paying. It was 8 months after I stopped paying before I received a summons. I really think you'll be ok if you are planning on filing in Feb/Mar.