What happens if you are in a 13, and suffer a job loss?

[espo1357]

Don't feel like going to my lawyer with this UNTIL it happens, but was wondering what happens.

In a 13 now and doing fine, but things are not looking good and job loss is probable, so what happens?

What about the second mortage, that is about to be stripped? If the 13 converts to a 7, because of job loss, can they still have a claim on the house even though it is already stripped? Or is it stripped AFTER the 13 is discharged.

Thanks for all of your help. This forum is a light in a crazy world.

[shark66]

The second mortgage gets stripped once the discharge happens.

I'd be talking to an attorney if I were you, yesterday.

Best of luck.

[MSbklawyer]

No, lien stripping (also referred to as cram down) cannot happen in a 7. It is only available in an 11, 12 or 13. Not in a 7. Your options, if you convert to a 7, are to reaffirm or surrender.

But if you do lose your job, you move to modify your plan payments down and still stay in a 13.

[espo1357]

Ok, so the likely scenario would be thatI would stay in the 13, and get the 13 modified. Instead of paying 700 like I do now, I would pay much less based on the unemployment income.

[lrprn]

Members here who have lost their jobs during Ch 13 usually find their trustees are willing to reduce or even suspend payments while they search for another job. How long they can reduce or skip payments depends on how long the unemployment lasts and how patient their trustee is.

Ch 13 plans are modified when income goes down or expenses go up long-term - pretty much permanently. You can't modify a Ch 13 on unemployment benefits - they don't last long enough.

If you find a new job before your unemployment runs out, your lawyer takes your new gross salary and any expense changes, reruns the Means Test and Schedules, and sees if you have enough disposable income with the new salary to support a Ch 13 plan. The plan is amended accordingly.
If you don't find new employment or your new salary can't support a Ch 13 plan, then you can convert to Ch 7. Of course, if you filed Ch 13 to save assets, then those assets may have to be surrendered if they can't be protected by your state's bk exemptions.

[HHM]

This is what happens with a job loss and chapter 13 BK.

1. You contact your lawyer who will get a temporary forbearance of your chapter 13 payments, usually 3 months.
2. If you land another job, and can afford the original chap 13 payment, you simply restart. If you get another job and pays less, then you either (a) modify the existing plan to lower the payment, or if you qualify (b) convert to chap 7.
3. If you are do not find another job, you either (a) convert to 7 or (b) dismiss (not recommended).

[espo1357]

Thanks or the feedback.

Of course, I will check in with my lawyer on this,

and, I might just continue paying even if I lose my job (I would guess that that is an option too).

[HHM]

Thanks or the feedback.

Of course, I will check in with my lawyer on this,

and, I might just continue paying even if I lose my job (I would guess that that is an option too).

I wouldn't recommend that, it is a waste of money. What are you going to do if you run out of cash before the end of the month?

[Flamingo]

Thanks or the feedback.

Of course, I will check in with my lawyer on this,

and, I might just continue paying even if I lose my job (I would guess that that is an option too).

Note it was specifically indicated in our confirmed Plan that even if either of us lost our job, the Plan payments had to continue in the confirmed amount. You can't pick and choose what you want to do in a Chatper 13 and there are no options in a confirmed plan. Anytime there is a change of financial status in one's plan, especially something as serious as a job loss, immediately contact your attorney.

[espo1357]

I wouldn't recommend that, it is a waste of money. What are you going to do if you run out of cash before the end of the month?

Well, I do have savings (from a 401k loan that I can access, enough to cover it).

Just would hate to open up a can of worms with a job loss, especially at the possible risk of not getting a timely discharge.

Getting rid of the second mortgage was worth about 100k, and the bk is about 30k.

[Billssuck]

We had this exact thing happen after only 5 months of being in a ch13 plan; my husband lost his job last October and it has been tough since then. We immediately talked with our attorney when he lost the job and our trustee wouldn't suspend payments on the plan as they were uncertain whether or not we'd have enough future income to support a chapter 13. So we struggled through 4 months with still making our ch13 payments while on unemployment and my husband has since found another job that makes about $1,000 less per month. We just submitted a ch13 modification to surrender our home (changed our expenses to rent vs mortgage payments) due to the lower income. In our case our house takes over 50 percent of our income and we needed to let it go for us to be successful in our ch13 now as well as getting a true fresh start after our ch13 is finished. It is/was just too much of a money pit for us all the way around. Anyway, we are waiting on trustee approval for the modification and we are still making the same plan payment (only $125/mo in our case) if it is approved after doing the new expense sheet. Some may wonder why we didn't convert to a ch7 and the reason is that our attorney fees to convert to a ch7 that would have to be paid in advance as well as the non-exempt assets (cars) was more than what our total remaining payments are on our ch13 plan.

[Pinkrose]

This happen to us and we just converted to chapter 7. But we gave up our house, because we were too much in the red.

[JackBondLove]

Well, I do have savings (from a 401k loan that I can access, enough to cover it).

Just would hate to open up a can of worms with a job loss, especially at the possible risk of not getting a timely discharge.

Getting rid of the second mortgage was worth about 100k, and the bk is about 30k.

NO! Don't touch the 401K! It would be your only nest egg if you end up in Chapter 7!