If By Some Miracle - Job Offer Immediately Upon Discharge

[ApresMoi]

I was looking at some court decisions in Chaper 7s. There was one BK where the debtor got a raise within a few months of his discharge, and the trustee went after him because he/she believed the debtor had 'timed' his raise to avoid having too much disposable income at filiing. The trustee prevailed.

Question: I thought the whole point of a Ch. 7 was to free one up to start over? If I get a decent job offer after BK, of course I am going to take it. But how often does a Trustee do something like this? I find their actions a tad scary, because when does it end? When are you really done?

Can someone (either Trustee or a Creditor) reopen my BK discharge claiming abuse or fraud if I do find a good paying job within the 180 days after BK? How long do they track your employment income? I'm not trying to scam anyone, but I am definitely interested in finding employment.

Maybe I shouldn't file at all if they will come after me if I find a job. I could just take my chances that the CC companies won't sue (I actually think they will though).

[dakota112]

I would have to believe that if the court pulled this on someone then they are just being vindictive and that person needs to hire good counsel and take it to the judge. What else can you do? Hell, the fols at AIG are bankrupt and they are getting huge Christmas bonuses this week. This is insane.

[justbroke]

I was looking at some court decisions in Chaper 7s. There was one BK where the debtor got a raise within a few months of his discharge, and the trustee went after him because he/she believed the debtor had 'timed' his raise to avoid having too much disposable income at filiing. The trustee prevailed.

I haven't seen these "within a few months" because the case is usually discharged by then. However, I have researched these cases that happened prior to filing (where the 6 month lookback didn't catch the new income) and post filing (where it was "shortly" after filing... before the 341 Meeting).

This is called the Totality of Circumstances catch-all for the UST. There are people who actually time bonuses, layoffs and new employment to make the lookback period (calculation of current monthly income (CMI)) such that they qualify for a Chapter 7. This is specifically why most smart Trustee ask, at the 341 Meeting, if your income or financial circumstances have changed!

While the Means Test is reflection of your circumstances at the time you filed, many courts specifically take 11 USC 707(b)(3) to be meant for the Court to look beyond filing and look at your post-petition circumstances and behavior.

Question: I thought the whole point of a Ch. 7 was to free one up to start over? If I get a decent job offer after BK, of course I am going to take it. But how often does a Trustee do something like this? I find their actions a tad scary, because when does it end? When are you really done?

The purpose is not to game the system. There are clearly people out there who time jobs. If you actually get a high paying job, a day before filing or even 30 days after filing, why shouldn't your "change in circumstances" not be taken into consideration? Especially since Chapter 13 provides relieve for people with regular income?

Can someone (either Trustee or a Creditor) reopen my BK discharge claiming abuse or fraud if I do find a good paying job within the 180 days after BK?

Absolutely not. The UST does not "track" employment. I think your statement about a debtor receiving a raise "within a few months of his discharge" is not accurate. If you have the case reference, please post it. The UST is time-barred from bringing forth a motion to vacate a discharge solely for receiving a "raise" after discharge.

I would love to see the case cite on this point.

[dakota112]

The problem these days with our present and probably future economy is that employment does not necessarily guarantee solid, dependable and reliable future income anymore, certainly not for a period of 3 to 5 years into which one would enter a CH 13. What this does to the average person seeking and probably qualifying for CH 7 is to end up terrorizing them and their family. Imagine having decent income for 4 or 5 months and then losing your job and having to deal with attorneys again and refiling. This is cruel and unusual punishment in the form of mental anguish and should be outlawed. I have had 3 decent paying jobs in the last 15 months and lost all 3. Sure, I will be employed again, but who knows how long the job will workout for me. Does the UST understand this in his Totality of Circumstance?

[ApresMoi]

Thank you. I was sure I had bookmarked the site where I read those case studies, but I now cannot find it. It's possible that he got the raise after filing but before the discharge (instead of after discharge). When I locate the article, I will post back here.

Btw, I am not talking about gaming the system; I am talking about having lack of control as to when I get a job offer. The job search is within my control; when someone offers me a job is not. So my question was, what happens if immediately following discharge, someone offers me a great job. If you are correct -- the answer is -- nothing. Of course if I get the offer after filing and before discharge, then that change in income would become very relevant to the bk proceedings.


QUOTE=justbroke;363119]I haven't seen these "within a few months" because the case is usually discharged by then. However, I have researched these cases that happened prior to filing (where the 6 month lookback didn't catch the new income) and post filing (where it was "shortly" after filing... before the 341 Meeting).

This is called the Totality of Circumstances catch-all for the UST. There are people who actually time bonuses, layoffs and new employment to make the lookback period (calculation of current monthly income (CMI)) such that they qualify for a Chapter 7. This is specifically why most smart Trustee ask, at the 341 Meeting, if your income or financial circumstances have changed!

While the Means Test is reflection of your circumstances at the time you filed, many courts specifically take 11 USC 707(b)(3) to be meant for the Court to look beyond filing and look at your post-petition circumstances and behavior.

The purpose is not to game the system. There are clearly people out there who time jobs. If you actually get a high paying job, a day before filing or even 30 days after filing, why shouldn't your "change in circumstances" not be taken into consideration? Especially since Chapter 13 provides relieve for people with regular income?

Absolutely not. The UST does not "track" employment. I think your statement about a debtor receiving a raise "within a few months of his discharge" is not accurate. If you have the case reference, please post it. The UST is time-barred from bringing forth a motion to vacate a discharge solely for receiving a "raise" after discharge.

I would love to see the case cite on this point.[/QUOTE]

[ApresMoi]

I read on an attorney website that you have to have some form of regular income to even file a Chapter 13. Since I am on unemployment (which doesn't last that much longer), Ch. 13 may not even be an option for me.

I agree about the change in the job market. And sorry to hear that you are getting bounced around in it. Your comments are appreciated.

The problem these days with our present and probably future economy is that employment does not necessarily guarantee solid, dependable and reliable future income anymore, certainly not for a period of 3 to 5 years into which one would enter a CH 13. What this does to the average person seeking and probably qualifying for CH 7 is to end up terrorizing them and their family. Imagine having decent income for 4 or 5 months and then losing your job and having to deal with attorneys again and refiling. This is cruel and unusual punishment in the form of mental anguish and should be outlawed. I have had 3 decent paying jobs in the last 15 months and lost all 3. Sure, I will be employed again, but who knows how long the job will workout for me. Does the UST understand this in his Totality of Circumstance?

[justbroke]

Does the UST understand this in his Totality of Circumstance?

Ummm... if you have a job these days, you're doing a lot better than 1 in 5 people (20% of the population). The UST can understand when you don't have a job, but when you do... that's another story.

[dakota112]

It is the UST and BK attorneys that have job security these days, unless of course the economy finally does fall off a cliff and everyone goes bankrupt or becomes insolvent.

[CCsAreEvil]

I don't get it. So, does the TT totally track everything after the 341/discharge? I mean, been in the dumps for so long (unemployed). Got a job 1 month after 341 but before discharge. Making less than before, but at least it will pay the bills.

If that specific case was true, then it must be a totally rare thing. People need to "live".

Anyways, good luck on your job search. Tough market out there. Things should pick up some going into the new year.

[justbroke]

I don't get it. So, does the TT totally track everything after the 341/discharge? I mean, been in the dumps for so long (unemployed). Got a job 1 month after 341 but before discharge. Making less than before, but at least it will pay the bills.

No. They do not. By definition, a Bankruptcy petition is your financial "snapshot" on the day you filed. Nothing really counts after that, except in some limited circumstances (totality of circumstances and inheritances).

If that specific case was true, then it must be a totally rare thing. People need to "live".

We don't have a case cite for it. I believe it to be a misread of the case.