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Actual evidence wanted - new job prior to 341 meeting

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  • Actual evidence wanted - new job prior to 341 meeting

    Hi All,

    I've read numerous threads about people who may have had a change in circumstances for the positive prior to their 341 meeting and the advice people have given them.. But I'm looking for actual evidence.

    Has anybody been aware of a trustee converting a Chapter 7 filing to a Chapter 13, or completely dismissed a case due to gaining employment after filing but before the creditors meeting?

    I had lost my job, was highly in debt, and after a few months of unemployment (3) decided to file Chapter 7. Before I lost my job, my income was over the median and I did not pass the means test.

    Throughout my unemployment I diligently searched for a new job. I happened to get an offer after filing my paperwork. This new job will again put me over the median and I would not pass the means test.. I started the job this Monday, my first paycheck is Sept 9th, and my 341 meeting is Sept 10th.

    My attorney told me that bk is a 'snapshot' at the date of filing and anything that happens afterwards isn't considered. She says that I should be okay, and the court/trustee would think it is good that I finally got another job. I've read on here though that quite a few people have said to wait until after the 341 meeting due to the trustee asking if your circumstances have changed and/or expected income. While I appreciate advice, I'm looking for factual evidence to let me know if I need to be worried about the chances the trustee could 1. Ask me if I got a new job and am making more money than at the date of filing. 2. That he'll ask me to take the means test again (which I won't pass for Ch 7 again if I do with my new salary. Or 3. Convert my case to Ch 13 or dismiss my case all together.

    There seems to be a mixture of what people say on here, but it always seems to be a "better safe than sorry" attitude. Does anyone have actual experience of these things happening?

    I want to completely trust my attorney, but I don't want to leave something as important as this to words like 'should' or 'might'. If my case gets dismissed, my credit will be even worse than it is now with all my late pays, etc. And I'll still be on the hook for everything!

    Thanks for your help!

  • #2
    Actual evidence would come in the form of decisions on this issue coming from your district & trustee and judges within your district.

    As far as how the BK code is written, it is filing date that is important. This is also where an aggressive attorney comes into play. Your attorney should be on the ball enough to say to the trustee "Date of filing.." and not back down should the trustee try to convert you.

    Good luck to you and congrats on finding a job.
    Filed Chapter 13 02/2006 - Confirmed 05/2006 - Discharged 09/2011
    I'm not an attorney. My replies are merely suggestions or observations, not legal advice. As always, consult with an attorney before making any decisions.

    Comment


    • #3
      It could go either way. Many trustees will ask you if your financial circumstances have changed since you filed, and you have to answer that question under oath. (Some trustees may not ask this question. It depends on the trustee, whether the trustee is having a bad hair day, the district, etc...)

      If you were over the median before you lost your job, the trustee is more likely to ask the question.

      I was way over the median before I lost my job and my trustee asked several questions about my current, past, and future employment at my 341.

      Legally, your finances at the time of filing should be all that matters, but your projected future budget is the problem. With a larger salary, you will have money left over to fund a 13. The panel trustee may not push you into a 13, but the US trustee may look at your case, and you would end up in a chapter 13 under a totality of circumstances. As with anything ymmv.
      You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

      Comment


      • #4
        You may want to actually go to your courthouse and observe other 341 hearings.

        I am personally doing this...because first hand knowledge beats an attorneys opinion.
        Over Median Income - 10/04/10--Filed Pro Se Chap 7/ No Assets 11/10/10--341 Held 01/18/11-- No Distribution/No Funds 01/19/11--Not subject to dismissal under 521(i)(1) AND --Reaffirmation Hearing Held = APPROVED 02/10/11--Discharged

        Comment


        • #5
          "Has anybody been aware of a trustee converting a Chapter 7 filing to a Chapter 13, or completely dismissed a case due to gaining employment after filing but before the creditors meeting?"

          I have been in this business for over 2 decades and in that time I have never had a case (Chapter 7) where finding future employment (before or after the 341) was relevant unless having such employment was known on the filing date.

          Comment


          • #6
            Originally posted by despritfreya View Post
            "Has anybody been aware of a trustee converting a Chapter 7 filing to a Chapter 13, or completely dismissed a case due to gaining employment after filing but before the creditors meeting?"

            I have been in this business for over 2 decades and in that time I have never had a case (Chapter 7) where finding future employment (before or after the 341) was relevant unless having such employment was known on the filing date.

            What district are you located in?
            Over Median Income - 10/04/10--Filed Pro Se Chap 7/ No Assets 11/10/10--341 Held 01/18/11-- No Distribution/No Funds 01/19/11--Not subject to dismissal under 521(i)(1) AND --Reaffirmation Hearing Held = APPROVED 02/10/11--Discharged

            Comment


            • #7
              Originally posted by newbie2 View Post
              Actual evidence would come in the form of decisions on this issue coming from your district & trustee and judges within your district.

              As far as how the BK code is written, it is filing date that is important. This is also where an aggressive attorney comes into play. Your attorney should be on the ball enough to say to the trustee "Date of filing.." and not back down should the trustee try to convert you.

              Good luck to you and congrats on finding a job.
              In follow up to this comment, a question:

              If the trustee chooses to push you into a 13, do you get to re-do your schedule J home budget information?

              Comment


              • #8
                The key is, known at time of filing (as previously pointed out).

                Generally, if you get a job after filing but before the 341, that at least triggers an inquiry to make sure everything is on the up and up. The U.S. Trustee is looking for bad faith. Bad faith would be, having a job offer on the table, contract signed, but the debtor filed BK before the job actually started, but then immediately started working after the case was filed, and the income was such that the debtor could fund a plan. Thus, its not the fact of "getting" a job between filing and 341 that is the problem, it is "when" you knew you were getting the job that can cause a problem.

                The issue just doesn't come up that often, so it would be very difficult to research and find a case, assuming there is even a published case on the issue.

                Comment


                • #9
                  I dont know if this counts as evidence or not and I am sure it is district specific however, I am currently waiting for a response from the US Trustee regarding a convergence to chapter 13 or a dismissal.

                  I believed in the six-month look back period and and I believed in the "snap-shot" on the day you filed etc but this has not been the case for me.

                  Three weeks after I filed the US Trustee contacted my attorneys and requested new pay-stubs for the entire month of July, (we filed on July 8th) she then wanted a copy of my W-2 from 2009.

                  She contacted us a week later and said we were "presumed abuse" because she took my W-2 from 2009 and just divided by 12 and said that is what I was making. Over 1/3 of last years income was variable and we are currently on track to take a 24K pay reduction this year; however she did not seem to take this into account.

                  We responded to her inquires yesterday and are now waiting for her response. Conversion or Dismissal fight? I don't know yet.

                  BTW - I am an over median filer with a business that failed so I don't have a simple case. Negative DMi on means and schedules

                  ST
                  Filed 7 - 7/8/10, 341 - 8/17/10 - Continued, Presumption of Abuse Filed - 8/27/10
                  Report of No Distribution 9/27/10. Discharged 2/7/11 Closed 02/25/1
                  10/12 EXP. 681

                  Comment


                  • #10
                    Screentest:

                    In response to:

                    "I am an over median filer with a business that failed".

                    So, you are sure that less than 51% of your debt (including any personal guarantees) is business related?

                    As to the UST's inquiry, yours is different from what OP is asking. The UST is looking at your historical income for the year - not at whether or not you found gainful employment post filing. She is looking to see if you manipulated your income just to qualify. Once she realizes that you did not she will go away so long as the means testing calculations were done correctly. Remember, a presumption of abuse is just that, a presumption. You can rebut that presumption.

                    Comment


                    • #11
                      Yah, my house kills me on consumer/non-consumer. My house is 350k in the negative and the business debt is about 60k.

                      That's good to here your assessment of the US Trustee. We are very legit and our schedules are verified and accounting down to the last dollar after hours and hours of calculations. I know they are just doing their job and being thorough, I just worry about everything it seems.

                      I cant wait until she "goes away."

                      Our continued 341 is next Wednesday.

                      Thanks

                      ST
                      Filed 7 - 7/8/10, 341 - 8/17/10 - Continued, Presumption of Abuse Filed - 8/27/10
                      Report of No Distribution 9/27/10. Discharged 2/7/11 Closed 02/25/1
                      10/12 EXP. 681

                      Comment


                      • #12
                        Then I guess all I can do is keep my fingers crossed they're as laid back in my district as they are in yours, Freya!

                        I filed on Aug 4th, got my offer letter for the new job on the 10th. So hopefully that should prove that I wasn't hiding anything on the day of filing.

                        Comment


                        • #13
                          I observed a slew of 341 Hearings yesterday, 35 to be exact.

                          In one case - a debtor was unemployed on the date of filing.

                          That person was asked by the Trustee if they had a new job. The debtor answered "no." I noted the question was not: Do you have a job offer? The question was: Do you have a job?

                          People were also asked if they ran/operated a business. For people looking to do part-time 1099 work while unemployed, I could see this being an issue.

                          Here is a link to my observations in case you need it:

                          http://www.bkforum.com/showthread.php?t=61448
                          Over Median Income - 10/04/10--Filed Pro Se Chap 7/ No Assets 11/10/10--341 Held 01/18/11-- No Distribution/No Funds 01/19/11--Not subject to dismissal under 521(i)(1) AND --Reaffirmation Hearing Held = APPROVED 02/10/11--Discharged

                          Comment


                          • #14
                            Originally posted by gman View Post
                            I observed a slew of 341 Hearings yesterday, 35 to be exact.

                            In one case - a debtor was unemployed on the date of filing.

                            That person was asked by the Trustee if they had a new job. The debtor answered "no." I noted the question was not: Do you have a job offer? The question was: Do you have a job?

                            People were also asked if they ran/operated a business. For people looking to do part-time 1099 work while unemployed, I could see this being an issue.

                            Here is a link to my observations in case you need it:

                            http://www.bkforum.com/showthread.php?t=61448
                            Many trustees will ask about job offers and jobs. Omitting info, or lying is perjury and is a crime. It really is a dice toss as to whether the trustee will ask, some do, some don't, but if asked, the OP needs to answer honestly and not omit info, or there is a significant risk the bk will be dismissed.
                            You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

                            Comment


                            • #15
                              We are currently going through a similar scenario...hubby was unemployed 3mos prior to filing & received job offer between filing & 341. The trustee asked if he had found a job yet & questioned the pay. We informed the trustee that the pay would be "similar" to previous income---we were also asked if the numbers used to file reflected employed income or unemployment insurance income.
                              That was a little over a month ago, so we are about a month out from discharge? We have not heard anything except trustees report of no asset/no distribution, but UST known for chiming in at the last minute.
                              I'll keep you posted...

                              Comment

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