Chapter 13 to chapter 7 income loss

[dylancarly]

I filed chapter 13 3 years ago and have been making bi-weekly payments. I just lost my part time job and as a result my income will drop below the median income. I am getting 15 weeks severance pay from my part time job. Would I convert now knowing that my income will eventually be below the median or should I wait until the severance ends to convert. Do I have to wait a period of time after my severance ends to get below the 6 month look back period or is that not applicable. Also after reading some posts I am a little nervous that during our plan we obtained two 500 dollar limit credit cards. I dont recollect that I was told that we could not do this however I have read conflicting info. Should we pay these off prior to conversion? Also is it automatic that loosing 20,000 a year in income(which is what I pay in my 13 each year) qualify me for a chapter 7 conversion. How and when would I stop my wage garnishments because once my severance ends I obviously will not be able to have this taken out of my check and stay current with my other bills. So basically my garnishment needs to stop in conjunction with the end of my part time income.

Thanks

[Flamingo]

I'm sorry to hear of your job loss. First things first, contact your attorney with this information. It appears you have almost 4 months of severance from this job so you don't have a reduction in income yet. Do you have a 4 or 5 year plan? You stated you filed 3 years ago. Your attorney may advise you to seek another job to try to stay afloat and finish your plan since you are so far into it and it may be possible to modify your plan. Or, as you state, you may be able to convert. I don't know if you are trying to hold onto a house or other assets.

I am not certain about the look back period in your situation as to conversion but someone with more knowledge on that can help you or your attorney can advise you when you contact him/her about your situation.

The two cards are probably not an issue unless you convert to a Chapter 7 and they would need to be listed if they have balances on them at that time. Still mention them to your attorney. Usually trustees don't have an issue if you obtain credit below $1,000 during your Plan but most state that you cannot obtain any credit during that time without their permission. If you pay them off and try to leave them open and convert, they may get closed out by the lenders if you file a Chapter 7 after your Chapter 13. There is no guarantee.

Your wage garnishments can only be stopped by your trustee so you need to ensure you have paperwork or something from your employer as to when they will deposit your last severance payment into your checking account and provide that information to your attorney.

These are just my thoughts and opinions as to your situation; always do what is best for you and your family. Best of luck to you...

[woeisme]

On my wage order it states that it is NOT a garnishment, but rather that it is a VOLUNTARY payment to my CH 13 trustee. So I don't think it is true that you need a court order to stop the payments. Stopping payments may result in a dismissal of the CH 13, but it is my understanding that the trustee doesn't need to sign something to stop the payments, that the CH 13 petitioner can decide to stop the payments since they are voluntary and not court ordered.

[bcvw]

Mine says the following:

"It is ordered that XXXXXXXX as employer of the debtor, until further notice from the Trustee, deduct from the
earnings of the employee the sum of:
$755.00 Bi-Weekly"

I read that as saying the Trustee must lift the order for deduction.

It probably varies from district to district.