QUESTION
Will there be an issue if I left work before filing bankruptcy?
Asked on Oct 04th, 2016 on Bankruptcy - Nevada
More details to this question:
About 3 months ago, I voluntarily left my job to take care of my two children when we did not have enough money to pay for summer childcare for our oldest daughter following kindergarten. This meant eliminating childcare costs for both of our children (ages 6 and 2). I cashed out my 401K and pension to supplement my husband's income during the summer. My husband was anticipating a promotion which we prayed would come through so that I could continue to be home to take care of our youngest. Well, his promotion is still pending and I have not returned to work. We are starting to consider bankruptcy because we were not making ends meet all the time when I was working. I know that income is looked at the past 6 months for bankruptcy. If I have not been working for 6 months when we file for bankruptcy and my husband's income is our only income for the last 6 months, will there be a problem that I was working before that?
7 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The income test looks at your actual income for the past six months, there is no consideration of whether that income could be higher if you'd made different career choices.
Answered on Oct 27th, 2016 at 7:55 PM
1 Award
There will not be a problem that you were working before that since you have a legitimate reason for quitting your job. You do not need to worry about that becoming an issue.
Answered on Oct 27th, 2016 at 7:55 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Probably no problem as to your leaving work. Potential issue to resolve: if you cashed in your 401(k) and pension within the six months before filing, you would have to report it as income. You can deal with the question of possible 'abuse,' by making clear that this was a one-time addition to income, caused by an important need. Find a skilled bankruptcy lawyer. It's almost always worth the investment.
Answered on Oct 27th, 2016 at 7:54 PM
No, your work history will not be a problem, but you will have to account for how you used the retirement funds you cashed out. Keep praying for that promotion!
Answered on Oct 27th, 2016 at 7:54 PM
No. Mothers taking care of children are not an issue in a BK filing.
Answered on Oct 27th, 2016 at 7:54 PM
2 Awards
It is not a problem that you stopped work. However if you did not take your 401k money as a loan but cashed it out it counts as income and may make you ineligible for a chapter 7.
Answered on Oct 27th, 2016 at 7:54 PM
Too much detail! The bankruptcy court does not care WHY you left your job, it only cares that you are not able to pay your debts according to a very formulistic standard. Like most people who are not bankruptcy attorneys, you are worrying about the wrong thing.
Answered on Oct 27th, 2016 at 7:53 PM