Scenario Question; Stressed Here

[Badgerz]

Scenario: I asked earlier about my wife taking a job right as we start our BK process. (No job she gets is going to help as our current monthly expenses are double what I am bringing in alone.) So, let's say she takes a temp position that could turn permanent and could very well only be for a few months. This position pays well enough for the area we live in. We can't afford for her not to take the job as she has been job hunting for the last six months which has been the outstanding reason for us ending up where we are. At this point she has to take any job she is fortunate enough to be offered.

Ok so she gets this job, the courts see this as us having enough income to go to a ch. 13. Let's say we are put into a ch.13 and the job runs out after 6 months. We would most definately have to revert to a ch. 7. If this happens do we then have TWO BKs on our record?

Also, if the job runs out, we revert to a ch. 7 for a bit and she is fortunate enough to be offered another job are we in the clear to keep the income now that we would be in a discharged ch. 7?

Last but not least let's say she starts the temp job and the income starts getting high enough where we are worried about being forced into a 13. Can she quit the job or would that be fraudulent?

This is not fun.

[SinkingFast]

We went thru this exact discussion with an attny in a Consult on Monday.

He asked if I was looking for work. I said I was gonna find a job until a thorough review of our finances showed how bad it was. Then, the first attny we met with said he planned to put us in a Ch 13. So, I've decided to wait and see what happens with the BK. Whether it goes 7 or 13.

Attny said that was the smart move. He said the extra income could hurt us royally for a 7. If we wind up in 13, there's no sense for me to go to work. Everything I would earn, except for allowable employment expenses, would go to the plan. So basically, we'd be no better off if I go to work in a Ch 13. If we get a 7, he said it would be safe to go to work after discharge.

[Minnymouth]

Most attorney's will advise NOT to be job hunting during the BK process. It messes up the financial part of your petition. Can often then throw you into a Chapter 13 where as when you filed you would have been in a Chapter 7....

Suggestion - if you filed and qualified for a Chapter 7 - then wait till after discharge to go job hunting... especially if spouses job might be just temporary employment.

Waiting 60 days for discharge after the 341 meeting is a lot easier and less trouble then ending up doing a Chapter 13 for 5 years because of a parttime job......

Keep us posted....

[Badgerz]

Points well taken. As for the other questions...

1. If you are forced into a ch.13 and somewhere along the way it needs to be reverted to a ch. 7 because you can't keep up with payments does that mean you now have 2 BKs on your record or is it still considered the same one?

2. What if she takes a job and after a month decides she hates it and quits. Is quitting a job asking for trouble?

Thanks.

[Minnymouth]

Ok,
When you enter a Chapter 13, the Court has determined that you do have disposable income to pay the Chapter 13. If you fail to make the payments - then your case will be dismissed and you become responsible for all debts (in full) again. You cannot file a Chapter 13 again for a specific amount of time (do not know the time limit for the new laws).

Chapter 13's have been converted to Chapter 7's but the Court has to agree that is what is necessary.. (thus meaning more money and filing fees).. You cannot just cancel a Chapter 13 to change to Chapter 7 because this is what you want to do.

Going into a Chapter 13, the quiting a job because you don't like it can mean trouble for you. It will not automatically throw you into a Chapter 7...... The Court will get the impression that you filed 13 then deliberately quit a job to get it transfered to a Chapter 7......

You have to be careful here in what you do...........

[StaciMM]

If your current monthly expenses are double your income, would your wife's potential income be enough to put you in the positive? If not-it most likely would not put you into 13 territory.

If you do file one chapter, and then covert to another, I'm pretty sure there would be a new public record going on the report. Probably the only way to confirm/deny is for someone who has 'been there/done that' to respond.

[SinkingFast]

The attny we Consulted with spoke to this issue from an unscrupulous attny's point of view.

Scoundrel attnys will look at clients with a level of income as "cash cows". The attny will push the client into a 13 knowing full well the client could get a 7. It's all in how they present the case. The attny get's to collect their fee, which is about triple the amount charged for a 7, in full off the top. They get a chunk from the client pre-filing and the remainder comes direct to the attny in the first few months of 13 payments.

Those type attnys do this knowing full well they have put the clients in a no win situation. A life of hell with payments that cannot be maintained. Then a couple years later, the client is back to convert the 13 into a 7, which is where the client should have been from the start. And poof, more fee for the attny, more filing costs for the Court, and the client looses all the monies paid out.

Here's some stuff I found regarding change from 13 to 7

http://thomas.loc.gov/cgi-bin/bdquer...109query.html|

(Sec. 306) Requires the bankruptcy court to confirm a Chapter 13 plan if it provides that the holder of a secured allowed claim shall retain the attendant lien until payment or discharge of all debts.

Provides that if a Chapter 13 proceeding is dismissed or converted without completion of the plan, the holder shall retain such lien to the extent recognized by applicable nonbankruptcy law.

(Sec. 309) Revises requirements governing the effects of conversion from chapter 13 to another chapter. Declares that: (1) valuations of property and of allowed secured claims in a chapter 13 case shall not apply in a case converted to chapter 7; and (2) with respect to cases converted from Chapter 13, the claim of any creditor holding security as of the date of the petition shall continue to be secured by that security unless the full claim amount, as determined under applicable nonbankruptcy law, has been paid in full as of the conversion date. States that a prebankruptcy default shall have the effect given under applicable nonbankruptcy law unless it has been fully cured pursuant to the plan at the time of conversion.

(Sec. 312) Extends the time between Chapter 7 discharges from six to eight years. Denies a chapter 13 discharge to any debtor who has received a discharge: (1) in a chapter 7, 11, or 12 case within the preceding four years; or (2) in another chapter 13 case within the preceding two years.

From another website:

http://bankruptcy.findlaw.com/new-ba...7_compare.html

According to the checklist, "You can't file for Chapter 7 unless the recent bankruptcy was a Chapter 13 case, and you repaid at least 70% of your debts." I don't know if that applies when you are defaulting on the payment plan.