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Filing Ch 7 with income of both spouses which exceeds means test. One spouse retires in few months how does this effect the case

Stone Mountain, GA |

How does change in spouse's income effect Chapter 7 case? One spouse will continue working, the other will have a monthly pension check. How does this work? Can the pension check be used to pay back creditors if case is not accepted or is converted to a Chap 13 due to current salaries?

Attorney Answers 6

Posted

First of all, if you are planning to do this pro se, don't! The US Trustee in this district will almost certainly file a challenge. An experienced lawyer can address it.

If a delay in filing is possible, that may be smart. Timing is everything. And you want a good lawyer to be sure that there even is a means test problem. You may not have looked at all the allowable deviations and additions.

Retirement income is used all the time in Chapter 13s.

If you don't yet have a lawyer, feel free to call me (404-768-3509). If you do, speak to him or her.

If you find this answer helpful, please mark it here on AVVO as helpful. In answering you, I am attempting to communicate general legal information and am not representing you (and am not your lawyer). Do feel free to call me at 404-768-3509 if you wish to discuss actual representation (the phone call also does not retain counsel; that requires an office visit and appropriate paperwork). In that a forum such as this provides me with limited details and doesn't allow me to review details and documents, it is possible that answers here, while meant to be helpful, may in some cases not be complete or accurate, and I highly recommend that you retain legal counsel rather than rely on the answers here. (You can also email my office at geaatl@msn.com . An email also does not retain my office, but can help you get an appointment set if you prefer not to call). I am happy to discuss possible representation with you. Any information in this communication is for discussion purposes only, and is not offered as legal advice. There is no right to rely on the information contained in this communication and no attorney-client relationship is formed. Nothing in my answer should be considered as tax-advice. To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. I am also required to advise you, if your question concerns bankruptcy, that the U.S. Congress has designated Ashman Law Office as a debt relief agency that can help people file bankruptcy.

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Posted

Yes, pension money can be and will be used to determine if you qualify for a Ch.7 or Ch.13. You should not FILE bankruptcy until after your spouse retires, but you may want to consult with an attorney now to determine which BK you qualify. If you know what your monthly pension will be, he/she can run the numbers now. If you only qualify for Ch.13 (they are mutually exclusive), your Ch.13 Plan payments will be less after retirement. Good luck.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

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Posted

I would agree with Mr. Ashman. Each Circuit will handle it a little dfferently. In NJ, you could file the C13 and then convert down to the C7 as not ALL retirement income is part of the Means Test, and by that I mean Social Security as some people interchange the term pension with SS. Standard Pension income is countable for the Means Test, so if you can not wait, you may be able to file the 13 and then convert down, if you do not have to worry about equity issues.

The previous information is solely for informational purposes only. If you have further questions, please contact an attorney in your area for more specific answers. Responding to your question in no way creates an attorney/client relationship, and none of the specific guarantees of privacy exist. If you have found this information helpful, kindly check the "helpful" box.

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Posted

If you know the amount of the pension, a qualified bankruptcy attorney could look forwards and back to determine whether or not you could still do a chapter 7, or what the dividend to unsecured creditors would be in a chapter 13. If you file chapter 7 and do not pass the means test, the US Trustee will move to dismiss the case or convert it to chapter 13. This not only muddies the waters on your case, create a basis for outright dismissal of the case for bad faith, or could cause you to have to convert to chapter 13 and pay more than your would had you waited because the of plan base and commitment period. Timing of the filing of your case could be crucial. Give me a call or see a bankruptcy attorney from this site for a free consultation to go over all of the income figures and find out what your options are.

The above information is general in nature. In order to obtain more specific and legal advice upon which to base your important decisions, please contact our office directly for a free phone or in person consultation. Robert M. Gardner, Jr. Hicks, Massey & Gardner, LLP hmgrmg@yahoo.com 53 W. Candler St. Or 718 Oak St. Winder, Ga. 30680 Gainesville, Georgia (770) 307-4899 (770) 538-0555 gadebtlaw.com hicksmasseyandgardner.com serving metro Atlanta and all of Northeast Georgia Bankruptcy, Divorce, Personal Injury, Worker’s Compensation, Medical Malpractice, Adoption, Civil and Criminal Litigation

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Posted

I would consult with a BK attorney in your area to calculate your ch 7 eligibility, based on the drop in household income. Pensions are included in the means test. It may pay to wait up to 6 months after the reduction of income, in order to qualify for ch 7(of course you may be eligible earlier, or not at all) If there a rush to file immediately? If the case is filed with a presumption of abuse, the UST will probably make a motion to dismiss, at which point you must overcome such a presumption or convert to 13.

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Posted

You should speak with an experienced bankruptcy attorney in your area. Calculating these on your own could be detrimental to your case! You may be eligible for a Chapter 7 with the changes in your income during the next few months. Retirement benefits will be used in calculating the means test, with a few exceptions such as social security.

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