When can I convert?

[julsmom]

DH is losing his job the end of this month, can we convert to CH7 at that time or do we have to wait for our income to be below the means for 6 months? how does that work? At this time *today we would be above the income for a family of 4. But with the CH13 we have 0 savings accumulated & since DH's job was a constult position, he gets no severance and no unemployment so basically we are up the creek without a paddle as soon as he has no income coming in. And with this economy it's not like he will find a new job right away, he's already trying but it is not looking good.

We are weighing our options, we have a meeting with atty next week but trying to get my thoughts in order.

I don't know if I should even try to stay in this 13, it was a good deal at the time, lien strip out of the 2nd mor but we are only 2 years in, so we would still have 3 to go & there is no way we can do it & make the mortgage payt without a 2nd income.

[justbroke]

First, you should immediately speak with your attorney. I suggest talking to your attorney whenever you actually have a change in income or are anticipating such a loss. It varies as to when you can convert. In some Districts, the Chapter 13 Trustee requires you to wait some period of time. During that period, they typically reduce or eliminate your payment (a forbearance). At some point, sometimes 3 months, they would allow you to convert to a Chapter 7. In some cases, you could get a hardship discharge from the Chapter 13, but that usually requires something more drastic than just losing your job.

I'm glad that you are ready to meet with your attorney and have started to think about what you could do.

The only thing you can do is what you're doing now. I would get a spreadsheet and start making calculations to see if the Chapter 13 is worth it (especially with the lien strip). If you know you're losing the 2nd income, start to look to replace it or at least replace most of it. If you have disposable monthly income (DMI) under the current plan, and it's mostly from the 2nd income, you could probably lose it. If you have children, maybe the second income stays home and watches the children -- over childcare expenses.

No matter what the situation is, you will need to run the numbers! You need to perform various what-if scenarios with/without the income, a reduction in income, conversion, or staying in Plan with a reduced payment.

[SMinGA2]

Other than the lien strip - was there any reason in particular you filed a 13 originally? The reason I am asking: if you filed a ch. 7 less than 8 years before the filing of your 13, you can't convert this 13 into a 7. You would however be able to dismiss this case and at some point in the future file a ch. 7 case. (Assuming 8 years between ch. 7 filings.) This might not apply - but figured it would not hurt to mention.

As justbroke pointed out - you should have some options. Since a successful 13 leads to a lien strip, talk to your attorney to find out if you have the option of modifying to a reduced plan payment. If your plan was set up to pay something to unsecured, and you didn't have non-exempt assets, that should be a possibility.

If you ultimately decide a ch. 7 is the only way to go, you'll also need to decide what you want to do on your house. Keep paying the first and eventually hope to settle on the 2nd, or let it go. If you decide to let it go, you might condider dismissing this 13 and waiting to file a 7. Give yourself some time to save up mortgage payments to prepare for an eventual move, live rent free for a while. Depending on the foreclosure process in your state - you could have a good bit of time.