Husband laid off; before Chapt 13 341 meeting

[kathlee29]

Bad news, my husband was laid off yesterday and we are in the middle of a Chapter 13, we have made two payments before the 341 which is in two weeks; (high payments due to his relatively high income) and we will have no income now, save for a few monetary gifts a year from his family. The only reason we didn't qualify for a Chapter 7 was the monetary gifts we cannot refuse as his family can never know about this BK or that we are in financial troubles.

Our lawyer said it is not so simple to convert to a 7 and I am wondering why not? We are 200k in debt and now have about 40k in the gifts and severance for this year. We rent, lease cars that are almost up and have no assets and nothing to sell or want to keep.

Any advice is appreciated!

Kathi

[lrprn]

I'm very sorry to hear about your husband being laid off

Your lawyer is probably saying that under the circumstances, your trustee is going to expect your husband to make a good-faith effort to find another job before a conversion to Ch 7 is allowed. Also your Means Test calculations are going to take a period of time before your combined incomes (even if the major wage earner's is zero) slip below the median income for your state. Until then, your case can't be converted.

It's time to have a frank discussion with your lawyer about whether it's best to wait to see if your husband is able to find another job in the meantime that may allow you to continue your 13 with an amended plan, dismiss your 13 now and file a new 7 when your incomes drop below the median for your state, or wait things out to see if it's possible to convert to a 7 later. The answers are going to depend on several factors and your lawyer knows your financial situation, assets, etc. best.

Hang in there. Dark days often lighten up as time passes and you are able to figure out what's going to be best for your family in these unfortunate circumstances

[kathlee29]

lrprn,

My husband took his (very meager) severance package documents to the lawyer today who said we will convert to a 7 in a few months (after 341 but before confirmation); we will keep paying the high plan payments we are now and in good faith my husband will try to find another job in the meantime. Cobra starts next month and will pretty much eat up the severance. My husband is in an antiquated boutique type business in the financial world that is going the way of the dinosaur and its all he has done for 20 years, but the part of this business he is in serves almost no purpose anymore. Thus, this is his 3rd lay off in 5 years due to the sort of business he does. Which is also the reason (one of them anyway) that we are in the financial straights we are. The money just stopped coming in.

As far as job prospects realistically, its not looking good. He has two former co-workers from his last job still out of work (over a year each) so, he is going to have to literally change careers mid-life at this point, there is no use for his job expertise anymore which my husband and the lawyer talked about today.

Thank you for your help on this forum, it has literally been a life saver to see other people go down this road and come back from it (still sane?)

[mountanddo]

Our lawyer said it is not so simple to convert to a 7 and I am wondering why not?

I would guess the reasoning would be that some people, not saying that this is you, would see their high chapter 13 payments and quit their job so they qualify for a Chapter 7 and then resume working. Your husband was laid off so there shouldn't be an issue with that. Not everyone is on the up and up and I would imagine for everyone that files Bankruptcy legitamately that there are a dozen that work the system to their advantage. Kinda ruins it for the honest folks.

[shark66]

I'm going to throw in my two cents, because the route that your attorney is suggesting makes absolutely zero sense to me...

If I were in your situation I'd stop with the plan payments right now. You're going to need that money. Confirmed or not, your Ch. 13 will not get dismissed overnight, and when it does get dismissed for non-payment, it will be without prejudice.

By the time creditors wake up and start harassing you again, your Ch. 7 should be right around the corner.

Good luck to us all.

[kathlee29]

I would guess the reasoning would be that some people, not saying that this is you, would see their high chapter 13 payments and quit their job so they qualify for a Chapter 7 and then resume working. Your husband was laid off so there shouldn't be an issue with that. Not everyone is on the up and up and I would imagine for everyone that files Bankruptcy legitamately that there are a dozen that work the system to their advantage. Kinda ruins it for the honest folks.

It does ruin it for those of us that really need this. I would rather pay the high plan payments than have my husband out of work. We can afford our plan payment or at least we could until the lay off yesterday. We were an original chapter 7 with a bk mill two years ago and converted to a 13 bc of the family gifting but that case was dismissed without prejudice for failure to make outrageously high plan payments so we hired another attorney and refilled a 13, and in this new case had every expense we spend money on documented and we are fine with the payments even tho they were high. The only issue I had with this new 13 was child support that doesn't come in regularly being considered as income when it rarely gets paid. I can't imagine anyone wanting to go thru a bk if not truly nessesssry. This has taken up almost two years if our lives and it's still going on.

Shark - I will ask my lawyer why he wants us to continue to pay up til confirmation but I think it has something to do with our last case with another attorney going bust and our new attorney not wanting to aggravate the trustee. We are supposed to be getting the paid plan payments back before confirmation less attorneys fees. Until then it's scrimp and save. The same as what we have been doing the past 2 years.

Thank you both so much for your replies!

[kathlee29]

341 meeting was yesterday

My husband is looking for work with 3 headhunters and so far no interview's have been scheduled. He has been out of work almost 3 weeks. It's scary. I am getting worried about what happens in April at our confirmation if he is still out of work.

Our lawyer said we will convert to a 7 in April if my husband is still out of a job at that time.

Question; how long does a conversion to a Chapter 7 to discharge take? Will we have to have another 341 meeting with a Chapter 7 TT? What if my husband finds a job btwn the 341 Chapter 7 meeting and discharge, will we be put back into a 13?

TIA!

[lrprn]

I am getting worried about what happens in April at our confirmation if he is still out of work.

It depends on your trustee and how long he/she is willing to wait the job hunt out. Your Ch 13 won't be confirmed until your combined incomes show sufficient disposable income on your Means Test and Schedules to support a Ch 13 case (about $160/month or so).

Our lawyer said we will convert to a 7 in April if my husband is still out of a job at that time.

Yes, given what you've shared about your situation this is very likely the best path given the circumstances.

Question; how long does a conversion to a Chapter 7 to discharge take?

Your lawyer first files a motion to convert with your local bk court and refiles your case with the Ch 7 Means Test. Once the court receives the paperwork, the conversion to Ch 7 is filed.

Typically most uncomplicated Ch 7 cases take about 120 days from filing to discharge.

Will we have to have another 341 meeting with a Chapter 7 TT?

Yes.

What if my husband finds a job btwn the 341 Chapter 7 meeting and discharge, will we be put back into a 13?

It depends on whether the new job creates enough disposable income on the Ch 7 Means Test to support a Ch 13 plan.

Hopefully your husband will find a good job soon and your Ch 13 can continue forward as planned. Good luck - keep us posted!

[kathlee29]

lrprn,

Thank you for your responses! I make almost enough on my own (when the child support comes in) so that if my husband makes anything over 20k a year we will be over median in our area. The 13 TT said at our 341 to average out the yearly CS and we will go with that # and include it to our income/plan payment.

ETA; At the 341 the Chapt 13 TT did say we could not move forward without my husbands income and that we would be looking at a Chapter 7.

Question; if we convert in April to a 7, and (let us pray) my husband starts a job in May, June or July would we then have to reconvert to a 13 or do we stick to a 7 and move on?

We have been in the BK vortex for 2 years in June and I am ready to make a plan and move on from all of this. My husband losing his (relatively) high paying job 2 1/2 years ago was what caused these money issues in the first place, (taking a job at 1/6th his old pay with no yearly bonus). Now, with him bringing in no income...matters just got much worse. But, at least I have my job.

Thank you so much for all your help on these boards, you are truly a lifesaver!