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Severance Pay & Convert CH13 to Ch7 ?

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    Severance Pay & Convert CH13 to Ch7 ?

    Multitude of questions. I have an attny. Going to see them in an hour or so ( there goes $300). But, I need some advice from been-there and done-that people.

    Anyway.. things were going ok in the filing process. I had some number adjustments to make after our 341 a few weeks back, but all looked pretty darn good.

    Then I get a notice from the IRS that I didn't pay taxes on 6K of a 401K distribution in 2007. It's not true. The "tax calculation program" made errors, but that's another story. I'll dispute it and I didn't sweat that one too much. Now, I am sweating because, I got laid-off Monday.

    There's a offer on the table for me that is equal to a couple of months pay plus, health insurance for the same time frame. The 'pay' is a one time cash payment. My questions are this.

    1) Now that I'm without income, don't I qualify for a conversion from CH13 to Chapter 7 regardless of any means testing?

    2) What claims if any will the Trustee have to my one-time severance payment?

    3) Will the trustee view a continuation of health insurance as "income"

    4) Is it to my advantage or disadvantage to fill the Trustee in on that IRS notice?

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