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If you are currently employed and are only eligible for chapter 13, Can you switch to a lower paying job, to file chapter 7?

Hanover, PA |

I am currently employed and make well above the maximum income required for Chapter 7 Bankruptcy. I am single and have no children. I live in Pennsylvania and I believe you cannot make more than $47,000/yr while still being able to qualify for Chapter 7. My question, is that if I take a position that pays under the median income and wait out the 6 months, will I be able to file chapter 7 without any restrictions? If somehow this is possible and I do file successfully and would be offered a higher paying position, would this affect the bankruptcy? Any help is greatly appreciated.

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Attorney answers 5

Posted

Yes, and you may not even need to:
A.Wait the six months;
B. Take a lower paying job; or
C. Worry about your job after the discharge.

You don't necessarily need to make less than the median income to qualify for a 7. A lot depends on your overall expenses and your mortgage and car loans. The 6 month wait may not even be necessary depending on what you made on the average during the prior six months. What you earn after you get a discharge is not counted. In short, there is a lot to consider. Any experienced bankruptcy attorney will tell you this. It is not a black or white matter (few things are). I would contact a bankruptcy attorney with at least five years of experience for this one.

Lawrence S Rubin, Atty.
Media, PA
610-565-666

Posted

Meet with a bankruptcy attorney & have him/her run the numbers for you. You may be able to overcome the " assumption of abuse."

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.

Posted

You could be eligible for a Chapter 7 bankruptcy right now. I've filed Chapter 7 bankruptcy cases for single individuals making $60,000 - $70,000 without any problems.

The Pennsylvania Median Income is a starting point but by no means is the test conclusive.

Schedule an appointment with a qualified Bankruptcy Attorney and go through the numbers to determine if you are eligible for a fresh start.

Stephen M. Dunne, Esq.
Dunne Law Offices, P.C.

1500 John F. Kennedy Boulevard
Two Penn Center, Suite 200
Philadelphia, PA 19102


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2013 Bankruptcy Super Lawyer in Pennsylvania

Posted

I call this proposed strategy "cutting off your nose to spite your face." If the attorneys you have discussed this plan with think this is a good idea, please find better attorneys to represent you. The most important issue in determining whether you qualify to file Chapter 7 is how much money is left over in your budget after paying your necessary living expenses, not what your gross income is. Making more than the median income in your state does not disqualify you from Chapter 7. Hope this perspective helps!

Susan Jane Salehi

Susan Jane Salehi

Posted

I definitely agree with this attorney. Even if you do not qualify for a Chapter 7, you most likely still qualify for a Chapter 13. There may be benefits for you in a Chapter 13 that you may not be aware exist. You should meet with an attorney experienced in filing both Chapter 7's and 13's before making a final decision. I have had consultations with many people who filed a Chapter 7 when a Chapter 13 would have been much more beneficial for them. Also, if the majority of your debt is non-consumer debt, you may not have to worry about that median income test at all. Seek advice from a competent bankruptcy attorney.

Posted

Take an excel spreadsheet. Total up the last six months of your income. Divide that by six. That is your six month average. That is what is looked at in the MEANS TEST. You can then use an on-line means test calculator for your region to determine if you qualify for a chapter 7. The means test allows you to enter figures that might allow you to pass. AFTER you file a chapter 7, if/when your income changes, that is OK. The chapter 7 bankruptcy looks at your income at the time you file and the six months prior to your filing. The trustee is not looking forward to see if your income goes up in the future.

Nick Curtis Thompson

Nick Curtis Thompson

Posted

If you read the supreme court decision in Lanning I believe that if the Trustee learns that the client is choosing to remain underemployed there is a problem. There is a good faith problem. Also if there is a certainty that income will increase there is a problem.