Chapter 13 and then job loss

[teddybeardj]

We are one year into our chapter 13. My wife was placed on probation at work for not maintaining her production minimums. She was a great employee until the system they use for grading this performance was changed. Now, everyone she works with has a production issue. Either the new process is flawed or all employees suddenly went bad. Putting that aside, if she is terminated, it would be hard for us to keep up our payments to the court as well as other medical bills that came after we filed, not to mention our mortgage and expenses.

What would the court do if she is terminated from her employment? It would be very hard to get new employment in this job market, and worse with her skill set.

Any thoughts would be appreciated.
Thank you.

[kornellred]

Chapter 13 plans can be modified when a significant loss of income occurs. You will have to provide documentation to the trustee, who will in turn file a plan modification with the bankruptcy court.

[lrprn]

Chapter 13 plans can be modified when a significant loss of income occurs. You will have to provide documentation to the trustee, who will in turn file a plan modification with the bankruptcy court.

Actually it's the Ch 13 filers' lawyer who modifies their Ch 13 plan to accommodate the change in income and files it with the local bk court, not the trustee. If the filers didn't file with a lawyer (filed pro se), then the filers themselves have to file their modified Ch 13 plan with the court.

Once the modified plan is filed with the court, then their trustee will review the modified plan to either approve the changes and send it on to the bk judge for final approval and official signature or the trustee can file objections to it the same way he/she could file objections to the original plan. A modified Ch 13 plan essentially goes through the same review and approval processes as the original Ch 13 plan did. The exception is that the creditors who did NOT file claims the first time can't change their mind and file claims on the modified plan now.

To teddybeardj, here's hoping your wife weathers this sudden unexpected probation and keeps her job. We're pulling for her!

[teddybeardj]

Thank you for your reply. I was looking at the hardship discharge and will ask my attorney about it if she does lose her job. It would be too hard to lose almost half our income. Not a very fun thing, so I'm hoping she weathers it also.

[justbroke]

Bear in mind (pun intended) that hardship discharges are for what the court considers a true hardship. Typically, loss of a job in a Chapter 13 results in conversion to Chapter 7, not a hardship discharge. Generally speaking, if you could convert to a Chapter 7, then you wouldn't receive a hardship discharge because Chapter 7 is available. It's hard to say just what constitutes a "hardship" from District to District. Some say that it must be an inability to work caused by injury, while some say it's that you are unable to work due to personally related reasons (like being fired for cause or quitting without cause).

I hope that you and your spouse can work through this and find the best way to move forward. Personally, I like the idea of a conversion (to Chapter 7), but it may be a few months while the Trustee gives you a forbearance to determine if you'll be able to get another job. Well, actually, you need to first have some sort of reduction in income or job loss before you can entertain these options.

[Flamingo]

We are one year into our chapter 13. My wife was placed on probation at work for not maintaining her production minimums. She was a great employee until the system they use for grading this performance was changed. Now, everyone she works with has a production issue. Either the new process is flawed or all employees suddenly went bad. Putting that aside, if she is terminated, it would be hard for us to keep up our payments to the court as well as other medical bills that came after we filed, not to mention our mortgage and expenses.

What would the court do if she is terminated from her employment? It would be very hard to get new employment in this job market, and worse with her skill set.

Any thoughts would be appreciated.
Thank you.

First, realize that there is nothing you can do until she is actually terminated. When and if that occurs, you immediately contact your attorney who will correctly advise you as to your situation and that will include your wife obtaining another job as soon as possible and know that even if there is a job loss during a Chapter 13, those payments still have to be made. If your wife would be unable to find another job, depending upon the other financial factors of your situation, your house, mortgage, etc., a modification might be possible or you may have to convert to a Chapter 7 and you may not be able to afford to keep your home with her income loss. If you are really worried about the situation, speak with your attorney.