Increase in income after file date?

[berrymom35]

We are set to file chapter 7 on July 1st. We lost our home to foreclosure, and we downsized our income to quailfy. My husband has been offered a new job to start mid july which would substantially raise his income.....according to january-june..we qualify for chapter 7. How long after this 6 month period can we get a raise in income? We'd hate to let this opportunity pass us by, but not at the expense of losing our chapter 7 qualification!!!

[JRScott]

Ideally you'd want to wait until after the 341 to have any significant (more than 10% increase) in pay.

[justbroke]

As written, you don't want the raise to occur before you have to answer the "has anything changed" question at your 341 Meeting. Not that I think the Trustee (or UST) would do this, but they can look at your totality of circumstances after the 341 Meeting to determine if your circumstances changed and now you have a great job/income.

Speak with your lawyer about how you want to deal with this and what impact the job would even have. If the (new) job puts your significantly over the median, you'll get more scrutiny.

[pookieny]

I thought the look back for income was the prior 6 months before filing, not after?

[berrymom35]

I thought the look back for income was the prior 6 months before filing, not after?

Thats what we've been told too...so we thought that we were okay to accept a pay raise starting in July since our six months is from Jan-June....my DH found out today that they want him to start July 15th...which would give him his first paycheck the first part of august..which may work out...this would be so great for us, we've been through so much and have been broke so long.......DH is going to call lawyer today and talk to her about it...see what she has to say.....

[berrymom35]

DH just talked to atty, she said that she would advise to try and hold them off so the first paycheck would not come until mid august...which DH may be able to do...he goes in for an interview monday...we also have an appointment to go into the atty's monday afternoon to get everything ready to file!!!! This has been such a long road for us...our first consultation with her was over a year ago!

[justbroke]

I thought the look back for income was the prior 6 months before filing, not after?

This is the great irony of the new Bankruptcy laws, affectionately known as the BAPCPA.

The look-back for income, is only for the Means Test. It does not stop a Trustee who discovers that on the eve of filing, you won the lottery, inherited money, or just started or are enjoying an increase in income (from a job). This is why they ask, at the 341 Meeting, if anything changed.

The Trustee can always look to your "current" financial picture.

You have to think about it. The BAPCPA was to keep people from abusing Chapter 7 by denying Chapter 7 discharges for people who could afford to pay at least something to unsecured creditors through a Chapter 13. They created, what I call, an artificial hurdle, being the Means Test. However, the Means Test is just that... one hurdle. This is specifically why Trustees must look at your petition and means test to see if there is a "presumption of abuse" or just plain abuse. The presumptive part is based on the means test. The other "abuse" is based on "bad faith" and a "totality of circumstances" which includes a look "forward" at your financial condition.

Speak with your attorney about getting a job after filing and before the 341 Meeting. S/he is there to provide you with counsel and direction, which I certainly can't. How tough the US Trustee is, in your area, will also have some weight. Some USTs don't care about a change that occurred after filing... but many do.