Your job income plays a major part in how you file for bankruptcy. Your current monthly income (CMI) determines whether you automatically qualify for Chapter 7 bankruptcy or need to take the Means Test. If your income is too high for a Chapter 7 bankruptcy, then you can file a Chapter 13 bankruptcy, which uses your income and certain expenses to determine your monthly payments. Losing your job during your bankruptcy case could have a significant effect on the process. In this situation, it is critical to immediately inform your bankruptcy lawyer about your unemployment so you can discuss how you will respond.
Chapter 13 Repayment Plan
If you already qualified for Chapter 7 bankruptcy, becoming unemployed should not change your status. On the other hand, losing your job income will affect your ability to make Chapter 13 bankruptcy payments because you will have less disposable income. If you will not be able to afford your next monthly payment, you must not miss the payment without any explanation because the bankruptcy trustee could file a motion to have your case dismissed, allowing your creditors to take debt collection action against you. Instead, your bankruptcy attorney can help you through legal action, such as:
- Converting your case to a Chapter 7 bankruptcy
- Creating a new repayment plan with reduced monthly payments through a modification
A modification will take into consideration your current income and expenses. Depending on the number of months initially proposed in your plan, you might be able to extend the time of your plan, but a plan cannot exceed 60 months.
Filing for Chapter 7 Bankruptcy
Some bankruptcy filers who qualify for Chapter 7 bankruptcy choose a Chapter 13 repayment plan in order to prevent properties from being foreclosed on or repossessed. If you have lost your job, you may no longer have the ability to make payments under a repayment plan. However, your bankruptcy attorney can help you develop options that are best for you. For those who did not previously qualify for Chapter 7 bankruptcy, this may be a new chance to qualify.
Contact a Collin County Bankruptcy Lawyer
Losing your job does not end your bankruptcy, but it may require you to adjust your plan. A Frisco, Texas, bankruptcy lawyer at The Page Law Firm can discuss how your unemployment will affect your case. Schedule a free consultation by calling 214-618-2101.