Pay Cut in Half...now what?

[dovette7]

Haven't been on here in a while b/c everything was rolling right along.
We have a HUGE payment everyweek based on high income of husbands 2 years ago when filing. Since then, we've always paid on time. Husband took job making a lot less money and we moved to my mother's home to be able to make payments. I then went to work. Still we are making payments based on previous income and now making $20k less a year.

Today, husband got word that his income will be cut in half at end of January.
So there is no way we can make the bankruptcy payments at what they currently are when we will be making 56% less in income than when filing 2 years ago.

What are my options? I had talked with my attorney awhile back asking her hypothetically if something happened and we made less money and she said that the trustee wouldn't go for lowering plan payments and we'd have to dismiss our case and wait and refile another CH 13. But I don't understand how that could be true.

I just need some insight on my options. My husband has to decide 1st of all if he's even staying with this job b/c the boss has renigged and numerous promises to numerous employees and he just doesn't know about staying there with that instability. If that happens...we could live off my check for 6 months and refile a CH 7 as we would be under median income. But if he stays employed there, I don't know my options and my attorney has not been as knowlegable as I think they should be.

Not freaking out like I did 2 years ago when I thought the world was ending and having to file. We've got our health and our kids health and we're all together. Just need to figure out the best course of action knowing we cannot make these payments.

[AngelinaCatHub]

Not freaking out like I did 2 years ago when I thought the world was ending and having to file. We've got our health and our kids health and we're all together. Just need to figure out the best course of action knowing we cannot make these payments.

This is all that counts. From what you say, and I as a bk7 Guru, yeah, sure, would guess you possibly could convert to 7 and let it go. You will not be the first and deffinatly not the last to come. I wish you well, and if nothing more that I cannot do for you, at least I am on your side and you are in my prayer. 'Hub

[Flamingo]

When your income dropped to $20,000 less per year than what it was at the time of filing is when you needed to contact your attorney to look into a possible modification or a possible conversion to Chapter 7. As to the possible additional income loss of your husband's at the end of January, a Chapter 13 plan cannot be based on a financial event that has not yet occurred. In any event, you need to go over your entire situation with your attorney and I am really curious as to why you did not contact your attorney when you had such a drastic drop in income to investigate your options at that time. You stated you spoke with your attorney but "hypothetically" prior to the income loss.

[woeisme]

I can understand the OP not talking to attorney with first income loss, I pretty much did the same thing when my hubby took a paycut in March. We were able to figure some ways to cut from our budget and keep making the payments, and basically I didn't want to rock the boat when we were just getting going with our CH 13. Also because we didn't know how long my hubby would have this drop in income, didn't know what to tell trustee about length of time we were going to need to change the payments for... so just made do, I picked up some overtime, and kept on trucking. Now we know hubby's pay will be permanently decreased (due to disability) so will now ask for a plan modification once my overtime falls off for a while. the OP might be like us, just really wanted to make the CH 13 work and found ways to do so regardless of change in income.

[dovette7]

I did talk to my attorney at time of decrease. We were able to maintain payments by cutting expenses. We did not want to rock the boat and just wanted to make it through the plan. But now with this decrease, we cannot make the payments at this level. Called attorney today and left message and will hear from her next week..... on top of husband losing 50% of income...my company just cut 5% off all employees salaries and had major layoffs today. So there goes another 5% of our income.

I've read on here that whatever happens you don't want your case dismissed... but if they will not change payments..that's what will happen and there is nothing I can do about it.

[Flamingo]

I did talk to my attorney at time of decrease. We were able to maintain payments by cutting expenses. We did not want to rock the boat and just wanted to make it through the plan. But now with this decrease, we cannot make the payments at this level. Called attorney today and left message and will hear from her next week..... on top of husband losing 50% of income...my company just cut 5% off all employees salaries and had major layoffs today. So there goes another 5% of our income.

I've read on here that whatever happens you don't want your case dismissed... but if they will not change payments..that's what will happen and there is nothing I can do about it.

$20,000 is a severe drop in income for a Chapter 13 Plan to hopefully stay successful. Yes you do want to continue to make your payments and on time but if the income drop is severe as what you experienced, a modification is usually in order if the lost income cannot be replaced in a short period of time. A big income drop could cause Plan payments or mortgage or other payments to be late or not paid resulting in a dismissal. The other option is to possibly switch to a Chapter 7.