Going to grad school & file for ch7

[S2008]

I hope I can get an answer/comment for this question:

We currently do not qualify for ch7 due to high income. If I decide to quit my job and go to grad school fulltime (I'm going part-time now), can we qualify for ch7 BK then? Our income will be low enough to qualify for ch7.

Thanks!
S2008

[JRScott]

There are two parts to the means test.

The first part is a test on if you are at or below the median income for your state.

Even if you fail that part you can complete the rest of it and see if you qualify.

You would probably need to wait at least 3-6 months after quitting your job and going to grad school full time before filing. In addition if you work in the financial industry it can make it much harder to get a job later.

[S2008]

Thanks JR. I think it'll take me at least 1 year to get my graduate degree. After consulting with an attorney, I'll see if filing during that time is the best solution.

Regarding BK filing and its impact on getting a job, it is really unfortunate. What if the BK is caused by unreasonable medical expenses (in our case 50% of unsecured debt is due to medical expenses)? A nearby hospital billed a patient $10 for two pills of Tylenol.
Mind you, you can buy a whole bottle (~40 tablets) of Tylenol for $4. They inflate the billing because they are playing games with the Insurance companies, which typically reimburse them only 30% of the bill. The out-of-pocket payer gets hurt as they have limited negotiating power. Well, sorry for the ramblings . . .

[JRScott]

Medical reasons is one of the highest reasons for bankruptcy.

Mostly it would only affect jobs where you have to be bonded. Prospective employers would only know that you filed if they pulled a credit report. However that would not tell them why. If you still got an interview you could explain the situation and it might be okay.

[Flamingo]

Thanks JR. I think it'll take me at least 1 year to get my graduate degree. After consulting with an attorney, I'll see if filing during that time is the best solution.

Regarding BK filing and its impact on getting a job, it is really unfortunate. What if the BK is caused by unreasonable medical expenses (in our case 50% of unsecured debt is due to medical expenses)? A nearby hospital billed a patient $10 for two pills of Tylenol.
Mind you, you can buy a whole bottle (~40 tablets) of Tylenol for $4. They inflate the billing because they are playing games with the Insurance companies, which typically reimburse them only 30% of the bill. The out-of-pocket payer gets hurt as they have limited negotiating power. Well, sorry for the ramblings . . .

Hi S2008...JRScott is correct in his reply to you...over 50% of BKs are due to medical reasons. Note that most, if not all, prospective employers now pull full credit and background checks on prospective employees. When you sign an application and provide your SS number, the small print on there will indicate you give them permission to do that. What you might want to consider at that time is to explain your BK and the high medical costs if they are going to pull your credit. They will almost always tell you also they are going to do a background check, credit check and/or drug testing. Ask them if they don't. If your resume is good and you give them the impression you will be an excellent employee, plus your honesty, your chances of getting the job are extremely high.

Best of luck to you!!!

[Phillymanhere]

S2008,

I hope you caught JR's post about the means test. The second part concerns how much money you have left over after your "reasonable" expenses. Plenty of people on this board have qualified for chapter 7 even though their income was above the median for their state and family size. Just making sure you got that.

[fltoo]

Medical reasons is one of the highest reasons for bankruptcy.

Mostly it would only affect jobs where you have to be bonded. Prospective employers would only know that you filed if they pulled a credit report. However that would not tell them why. If you still got an interview you could explain the situation and it might be okay.

And sadly, studies show that more than half of those people went without needed medical care!
I have paid my own medical insurance all my adult life to the tune of 4-500 dollars a month and only used it every other year for a check up. Blue Cross raised it religiously every six months.

I had to give it up due to the cost and now have "crisis" insurance with a $10,000 deductible which is costing me about 150. a month.

Ironic, isn't it, now in later years when I probably will need it the most?

[S2008]

Thanks everyone for all your replies. Our current income is almost twice the State median income for a household of our size. However, we can easily be below State median if I take full-time course load at my college (thus, no big income) for 1 year.

On the tangent issue of healthcare insurance: The government should guarantee a decent healthcare insurance coverage for all Americans. If the Fed Gov can guarantee the debt of Fannie Mae and Freddie Mac, why wouldn't it be able to take care of its citizens? In addition, US companies would be more competitive globally if they are not burdened with heavy healthcare insurance cost for their employees. Promise I won't ramble again . . . :-)

S2008