As discussed in more detail in other posts, to qualify for a Chapter 7 case most people have to “pass” the Means Test, which is based on your income for the six month period before filing. It is normally a straightforward calculation – add up all income you have received in the last six months and compare it to your state’s Means Test figures. If your income is irregular (such as commissions) or you have received (or expect to receive) a bonus, you might have to file earlier or later so that large deposits do not take your income above the allowed amount. When I review the Means Test figures with clients and potential clients, and they realize they will not qualify for a Chapter 7, the next question they often ask is whether they can quit their job, reduce their hours or take other steps to reduce their income so they will qualify. Although the strict answer is usually a qualified “yes,” it can be a murky area for a couple of reasons.First, from a practical standpoint, it often is just not a good idea to quit a good job or even reduce your hours if it could harm your situation at work. If you have a good job, it is usually better to keep it in this economy. Second, although it is somewhat rare for Trustees or the U.S. Trustee to contest a Chapter 7 case when someone clearly qualifies under the Means Test, it is possible. Under Bankruptcy law, a Chapter 7 cases can be dismissed if the case is filed in “bad faith” or the “totality of the circumstances” indicate “abuse.” One of those circumstances is ability to pay (or the ability to pay had the debtor not quit his or her job). In practice, to have a case dismissed it would probably have to be coupled with other factors; for example, running up large debts before filing, filing multiple cases, being “coincidentally” re-hired by an agreeable employer the day after filing, and so on.
As long as no other bad faith factors are present, the person can probably file a Chapter 7 case and get a discharge if they qualify. You probably won’t find many good Bankruptcy lawyers who will encourage or recommend doing this, but they will discuss the issue and the risks. The greater risk may be getting another job later. If an objection is filed, the options will be to contest the objection, consent to dismissal, or voluntarily convert the case to a Chapter 13 or individual Chapter 11 case. As always, it is important to plan your case with a good Bankruptcy lawyer. For a good Georgia Bankruptcy lawyer or Metro Atlanta Bankruptcy lawyer, use the Contact form or call to set up a call or initial consultation.