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What happens if a person loses their job while in a Chapter 13?

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    What happens if a person loses their job while in a Chapter 13?

    Anyone have this happen.

    Could they convert to a Chapter 7 right away or would they have to wait until the previous 6 months average income is below the median?

    Thanks for any experience.
    T.

    #2
    Originally posted by tmaire View Post
    Anyone have this happen. Could they convert to a Chapter 7 right away or would they have to wait until the previous 6 months average income is below the median?
    Unfortunately losing a job along with other big financial problems such as a major illness/hospitalization or divorce during Ch 13 do happen all too often. These are the major contributors to the 70% Ch 13 failure-to-successfully-complete statistics .

    Whether you can convert to Ch 7 and when depends on several factors - if you filed with your spouse and how much income that spouse has compared to the median income in your state, what assets with payments in arrears that were included in your Ch 13 and if you still want to keep those assets, and if you previously converted your case before now.

    Here's a good explanation by a bankruptcy lawyer about converting Ch 13 to Ch 7 - http://www.************************/...o-a-chapter-7/
    Last edited by lrprn; 09-05-2007, 07:51 AM.
    I am not a lawyer and this is not legal advice nor a statement of the law - only a lawyer can provide those.

    06/01/06 - Filed Ch 13
    06/28/06 - 341 Meeting
    07/18/06 - Confirmation Hearing - not confirmed, 3 objections
    10/05/06 - Hearing to resolve 2 trustee objections
    01/24/07 - Judge dismisses mortgage company objection
    09/27/07 - Confirmed at last!
    06/10/11 - Trustee confirms all payments made
    08/10/11 - DISCHARGED !

    10/02/11 - CASE CLOSED
    Countdown: 60 months paid, 0 months to go

    Comment


      #3
      Originally posted by lrprn View Post
      Whether you can convert to Ch 7 and when depends on several factors - if you filed with your spouse and how much income that spouse has compared to the median income in your state, what assets with payments in arrears that were included in your Ch 13 and if you still want to keep those assets, and if you previously converted your case before now.

      Comment


        #4
        If you are going to lose your job soon, contact your lawyer and explain your changing circumstances. See what he/she suggests, including how quickly your 13 can be converted to a 7 once your job is truly lost.

        If this situation is just a "what if", now you know that given the circumstances you've described here, it's likely that if you ever do lose your job, your lawyer can convert your Ch 13 case to Ch 7. You will pay extra for the conversion, but all your unsecured debts will be gone - a fair trade
        I am not a lawyer and this is not legal advice nor a statement of the law - only a lawyer can provide those.

        06/01/06 - Filed Ch 13
        06/28/06 - 341 Meeting
        07/18/06 - Confirmation Hearing - not confirmed, 3 objections
        10/05/06 - Hearing to resolve 2 trustee objections
        01/24/07 - Judge dismisses mortgage company objection
        09/27/07 - Confirmed at last!
        06/10/11 - Trustee confirms all payments made
        08/10/11 - DISCHARGED !

        10/02/11 - CASE CLOSED
        Countdown: 60 months paid, 0 months to go

        Comment


          #5
          Originally posted by lrprn View Post
          If this situation is just a "what if", now you know that given the circumstances you've described here, it's likely that if you ever do lose your job, your lawyer can convert your Ch 13 case to Ch 7. You will pay extra for the conversion, but all your unsecured debts will be gone - a fair trade

          Comment


            #6
            if you are below the median, and have no secured debts, then why did you do a 13? You have an hands down chapter 7. I'd go ahead and try to convert anyway. As long as the attorney's fees and priority debts are paid, you shouldn't have any problem.
            Oct 9, 2007 - Filed my Chapter 13! Scores: 527/509/528
            Jan 1, 2009 - Sent in my last payment! Scores: 635/628/585!
            Feb 11, 2009 - DISCHARGED & CLOSED!
            I AM NOT A LAWYER. ANYTHING I SAY IS NOT LEGAL ADVICE.

            Comment


              #7
              I had TWO Full Time jobs. So it put me in a Ch13. I quit one job after paying 3 months into the chapter. I converted to Ch7, it seemed like it happened overnight. At the new 341 meeting, the Trustee asked why I was converting, and I replied, "I don't think I can handle working 80hrs a week the rest of my life!" He smiled, and said "ahhh, good reason!"

              The law does not require you too work 2 jobs let alone one, but if you only have one job I would have a very valid reason why you cannot work if you are just quitting to file for Ch7.

              Best of Luck, CMIYC
              July 2006: Filed Ch13 :blink:
              Oct 2006: Converted to Ch7 :clapping:
              Jan 2007: DISCHARGED :clapping:
              Nov 2007: CLOSED :yahoo::yahoo::yahoo:

              Comment


                #8
                Originally posted by EveryDayAdam
                if you are below the median, and have no secured debts, then why did you do a 13? You have an hands down chapter 7. I'd go ahead and try to convert anyway. As long as the attorney's fees and priority debts are paid, you shouldn't have any problem.
                Originally posted by CATCHMEIFYOUCAN
                I had TWO Full Time jobs. So it put me in a Ch13. I quit one job after paying 3 months into the chapter. I converted to Ch7, it seemed like it happened overnight. At the new 341 meeting, the Trustee asked why I was converting, and I replied, "I don't think I can handle working 80hrs a week the rest of my life!" He smiled, and said "ahhh, good reason!"

                The law does not require you too work 2 jobs let alone one, but if you only have one job I would have a very valid reason why you cannot work if you are just quitting to file for Ch7.

                Best of Luck, CMIYC.
                I am not voluntarily giving up my employment.

                CMIYC ,
                So are you saying that when you quit your second job you just told the trustee that as of now your income had decreased? You did not have to wait until your income from the previous six months was below the median? I hope I am not making this more complex than it has to be but if the company closes at the end of the year I will not have the income to make my payments for six months until our income falls below the median. Does this make sense?

                I really appreciate all of your responses. It is good to be able to hear from people that have BTDT.
                T.

                Comment

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