September — the best time for teachers to file for bankruptcy

Teaching — a good paying government job with lots of benefits, time off, and job security, right? Why would a teacher need to file for bankruptcy?

Sure, and there’s no stress, too! Right . . .

The fact is teachers file bankruptcy cases at about the same rate as the general population, for myriad reasons including layoffs, divorce, a spouse’s business problems, investment real estate that has gone bust, and so on.

And September is the best time for them to file. Beacause most teachers get paid on a ten month schedule, they are not drawing a paycheck during July and August. That can help teachers qualify for a chapter 7 bankruptcy and “pass” Congress’ onerous “means test.”

Here’s how it works: the means tests looks back at a person’s last six months of income, then doubles it to arrive at an annual estimate of how much a debtor makes. But paychecks received in the month that a bankruptcy case is filed don’t count. So in the month of September, only paychecks received from March 1st to August 31st are counted.

So teachers who aren’t receiving any pay in July or August will find it much easier to qualify for bankruptcy relief if they file in September, and not wait until later in the year, when their September and October earnings will be counted against them!


By Doug Beaton

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