Will there be an issue if I left work before filing bankruptcy? 10 Answers as of October 27, 2016

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?

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A Fresh Start
A Fresh Start | Dorothy G Bunce
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.
Answer Applies to: Nevada
Replied: 10/27/2016
Ronald K. Nims LLC | Ronald K. Nims
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.
Answer Applies to: Ohio
Replied: 10/27/2016
OlsenDaines | Rex Daines
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.
Answer Applies to: Oregon
Replied: 10/27/2016
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
They only look at the last 6 months. But, you must report anticipated changes. Consult with local counsel and see where you fall in the means test calculation.
Answer Applies to: California
Replied: 10/27/2016
Stephens Gourley & Bywater | David A. Stephens
It will not be a problem, but the money you received from cashing out your retirement, if it was done within the 6 months before filing will count as income.
Answer Applies to: Nevada
Replied: 10/27/2016
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    No. Mothers taking care of children are not an issue in a BK filing.
    Answer Applies to: Colorado
    Replied: 10/27/2016
    Garner Law Office
    Garner Law Office | Daniel Garner
    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!
    Answer Applies to: Oregon
    Replied: 10/27/2016
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    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.
    Answer Applies to: Wisconsin
    Replied: 10/27/2016
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    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.
    Answer Applies to: Nevada
    Replied: 10/27/2016
    The Law Office of M Grater LLC
    The Law Office of M Grater LLC | Mark O. Grater
    As a general rule they will only count the last 6 month income. That having been said, under the "totality of the circumstances" a trustee could claim, if he had the evidence to support it, that you quit just so you could file bankruptcy and thus create an issue. Also, if you cashed in retirement or pension funds within the 6 months prior to filing, this could count as income when computing the means test.
    Answer Applies to: Connecticut
    Replied: 10/27/2016
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