Quitting to pass under the bar?

[Genenco]

I remember someone said their lawyer suggested that they quit, so as to "Get under the max" so they could file Chapter 7.

I was curious, wouldn't this now be seen as possible fraud?

I mean, that say you tell the court "Oh, I was recently let go from my job" and there's proof, but 2-4 months later, you get it back (All planned previously with or without employers knowledge) and then once again, go on, bill free.

No, I'm not planning on such (Going back that is, the place sucks!) but was wondering how they all figure on that this now may begin a "Employment shuffle" with new filers....

[bkfiler]

good question lol

[FoolAndHisMoney]

Sounds like fraud. Not sure though. Have you done the means test to see if your allowed expenses can put you in a chapter 7?

[bkfiler]

what happens when people are humming along, racking up debt and then get laid off.

sooner or later they will find work. so why doesnt the trustee just say "go get work and no more problems"

would this situation qualify for a chapter 7 since sooner or later they can get work and get back to paying their bills?

anyone know?

[Genenco]

Sounds like fraud. Not sure though. Have you done the means test to see if your allowed expenses can put you in a chapter 7?

Oh I am WAY below means test for earnings, expenses are a bit high, but still within line with legal parameters...

Oh, just did some searching...Funny how my "Pondering" is also thought of by others:

http://www.post-gazette.com/pg/05116/494270.stm

Some also contend the test will make it easy for deadbeats to continue to work the system.

"People could stay out of work for another month or so to reduce their monthly income or [run up] debts" just to duck the means test, said Jeff Morris, resident scholar at the American Bankruptcy Institute, a nonpartisan group that tracks bankruptcy statistics.

Morris also maintains that the test will do little to actually get more money into creditors' hands, noting that two-thirds of Chapter 13 filers already fail to complete their repayment plans.

"It's unrealistic to think you will have a better success rate for people who are involuntarily forced into Chapter 13."

[FoolAndHisMoney]

Oh I am WAY below means test for earnings, expenses are a bit high, but still within line with legal parameters...

Oh, just did some searching...Funny how my "Pondering" is also thought of by others:

http://www.post-gazette.com/pg/05116/494270.stm

Some also contend the test will make it easy for deadbeats to continue to work the system.
"People could stay out of work for another month or so to reduce their monthly income or [run up] debts" just to duck the means test, said Jeff Morris, resident scholar at the American Bankruptcy Institute, a nonpartisan group that tracks bankruptcy statistics.

Morris also maintains that the test will do little to actually get more money into creditors' hands, noting that two-thirds of Chapter 13 filers already fail to complete their repayment plans.

"It's unrealistic to think you will have a better success rate for people who are involuntarily forced into Chapter 13."

True. All the means test is as well as counseling is to force people to look at bk as a last resort and not first. There are plenty of loopholes in the post Oct 17 law.

The thing is if a couple for example has large debts with unsecured creditors and they need to file, they must sell their home and car/s if it's over the IRS allowed rate to find a cheaper house and car and if they still can't make ends meet then they can file. It's to prevent unsecued creditors from getting screwed when the debtor can instead lower their living standards first to save money and pay cc bills. If someone's expenses are inline with the IRS standards and they still can't make ends meet then the presumtion of abuse does not arise and they can qualify for a chapter 7.

The law always was like this but it was the US Trustee that determined it. Now it's the means test.

[Genenco]

what happens when people are humming along, racking up debt and then get laid off.

sooner or later they will find work. so why doesnt the trustee just say "go get work and no more problems"

would this situation qualify for a chapter 7 since sooner or later they can get work and get back to paying their bills?

anyone know?

The problems are manifold usually.

On one hand, if the filer has their items paid for (House, car and banked good coin) they surely don't need to show up on BK court.

But those who are filing, usually have used every bit of credit they can and have "Hit the wall" and there's nothing more.

Times like these, it is one thing to lose and find a $8-$12 and hour job. But when you were making $65K a year, those jobs are MURDER to find out here (Portland metro area) and so, by the time they find even something close (And that's usually 10-20% below what they made previously) the late fees, payments in arrears and such, there's just about no way to "Catch up" unless the creditors are willing to help...And that's usually when people start filing.

Because the creditors don't care....

[bkfiler]

but if you file too soon then they are going to complain that you were using your credit cards.

and you were likley to have used a cash advance as well if you became desparate and they will complain about that too.

the more motions to dismiss by the trustee i read the more confused i get about who can receive a bk and who cant.

the rules are confusing to say the least. look at how much guessing goes on here and why we all have to wait for actual experiences to be posted over time for us to really figure out what is allowed and not allowed.

[Genenco]

but if you file too soon then they are going to complain that you were using your credit cards.

and you were likley to have used a cash advance as well if you became desparate and they will complain about that too.

the more motions to dismiss by the trustee i read the more confused i get about who can receive a bk and who cant.

the rules are confusing to say the least. look at how much guessing goes on here and why we all have to wait for actual experiences to be posted over time for us to really figure out what is allowed and not allowed.

Yes, that's going to be the real hard part for new filers. What do they get to keep, what do they HAVE to do?...Many new things, but frankly, I'm hearing that alot of those who wanted to file bk, still won't have a major problem doing so..The rules simply have shifted to a more invasive look at the debts and wages and now it's more cut and dried.

[StaciMM]

Technically, I think people could do this and get away with it. But, since the new laws look at the income average over the 6 months prior to filing, it isn't like someone could quit today, file tomorrow, and start a new job next week. They would need to be out of work for 2-4 months most likely to have the desired impact. They wouldn't be able to live on their cards during that time, as the new laws will be stricter on pursuing fraud issues (if you use cards without the ability to repay, that is CC fraud and the debt would likely not be discharged). And, I'm assuming that if someone is looking into filing BK, they probably don't have reserves to cover 2-4 months of expenses while unemployed.

Then, there is no guarantee that the person would be able to find another job easily once they are ready to work again. In the end, I think it would be a BAD move.

As a less drastic measure, I foresee people cutting back on overtime, etc., to get ready to file.

I remember someone said their lawyer suggested that they quit, so as to "Get under the max" so they could file Chapter 7.

I was curious, wouldn't this now be seen as possible fraud?

I mean, that say you tell the court "Oh, I was recently let go from my job" and there's proof, but 2-4 months later, you get it back (All planned previously with or without employers knowledge) and then once again, go on, bill free.

No, I'm not planning on such (Going back that is, the place sucks!) but was wondering how they all figure on that this now may begin a "Employment shuffle" with new filers....

[bkfiler]

well thats one of the questions. many people live on their credit cards before they find a job and then file while they cant pay anymore. that cant be fraud because many do it. however, then i see a trustee dismiss because of that. its like on a whim. inconsistant.

[Genenco]

I don't think the trustee will "Automatically" dismiss the case, they just may say "You MUST pay this amount back" and the rest slides off the table.

But, time will tell...

[Senior Citizen]

I'm the one who mentioned to quite.

This is what will actually happen. My C13 payment is $1250 a month. (Payed with S/S and pension) (starts in Dec) My wage is $1318 a month, I will get laid off. We use this money for every day expenses food electric and raising a 16 year old. My wife and I are 71 years old She is in ill health. When i get laid off I intend to be her care giver and not work any more. Will we be able to go from C13 to C7 (Old law) with out any problem?

[FoolAndHisMoney]

This is what will actually happen. My C13 payment is $1250 a month. (Payed with S/S and pension) (starts in Dec) My wage is $1318 a month, I will get laid off. We use this money for every day expenses food electric and raising a 16 year old. My wife and I are 71 years old She is in ill health. When i get laid off I intend to be her care giver and not work any more. Will we be able to go from C13 to C7 (Old law) with out any problem?

Not sure but under these circumstances you should qualify for a chapter 7 regardless.

[Genenco]

This is what will actually happen. My C13 payment is $1250 a month. (Payed with S/S and pension) (starts in Dec) My wage is $1318 a month, I will get laid off. We use this money for every day expenses food electric and raising a 16 year old. My wife and I are 71 years old She is in ill health. When i get laid off I intend to be her care giver and not work any more. Will we be able to go from C13 to C7 (Old law) with out any problem?

That's why alot of people fail to make it on the ch 13. too many variables can sink the plan fast.

But, you're safe in regards to pension and ss. can't touch it.