How long do you have to be unemployed?

[kmb]

We are about 16 months into our Chp 13 and my husband lost his job today. This will be about a 50% reduction in our current income. Is there a minimum time he has to be unemployed before we can try and get a modified plan? He'll be able to collect unemployment, but it will only be about 25% of what he was earning.

Just wondering what we should do at this point---do we need to try and hold on for awhile, or should we try and do something now. Not sure if the 6 month rule applies in the case of lost income or not.

TIA!

[lrprn]

Just wondering what we should do at this point---

Call your attorney first thing TOMORROW MORNING and let him/her know about your husband's job loss (so sorry to hear about that happening to him ). This way your lawyer can notify the trustee that you are going to have difficulty making your monthly payments and find out what options may be available to you regarding your payments until your husband finds employment again. (Did he get a severance package? If yes, let your lawyer know about that too.)

Also your lawyer can tell you if/when filing an amended Ch 13 plan or filing Ch 7 may be possible. Typically the job loss must be long-lasting with no reasonable options to re-employ at the same income level within a few months to file an amended Ch 13 plan.

Some trustees can be understanding in these situations, and some are not. Your lawyer can let you know what to expect from yours in your very unfortunate situation.

[BKParalegal]

If you are going to stay in your 13, then you have to file a PCM(Post confirmation modification) also depending on how much of your 13 included unsecured debt, you may not be able to modify the payments much. As well as some states have a UCP(Unsecured Creditor Pool) which is almost set in stone in regards to what percentage or amount you have to pay the creditors. The insult to injury is your attorney will charge you $400 plus to a PCM.

Good Luck

[kmb]

We are currently at 26% payback, and I think I recall our attorney mentioning that our state (IL) requires at least 10% payback, so I think there is some wiggle room. $400 is probably better than ultimately failing at the plan if it gets to the point we can't make our payments. Plus, I think we've already paid into the plan more than what our creditors would get if we sold our house, as we don't have much equity due to our HELOC and the falling home prices in our areas.

Thanks for the info---sounds like something to at least investigate further.

[imbroke2]

I'm in IL also and we're at 5% payback. My husband lost his job right at the time of the 341 and confirmation last year. He did find another job-took 6 months to find, was there 5 months and then laid off. He has been out since April of this year. We were OK though, between me working full time and unemployment. The payment to the trustee is taken out automatically from my paycheck. Luckily we haven't had to modify the plan. But I would definitely talk to your lawyer. Good luck.

[MajorMike]

What if you're the only one that earns income?

[MajorMike]

? Anyone?????

[chloe0724]

MM,

i would think that if there was only one person working, and that person got laid off, that unless they could find employment quickly, they would be able to convert to t 7

[kmb]

We are going to meet with our lawyer tomorrow to discuss. He indicated we have a few options, but I want further information. Our options are:

1. ask the trustee to waive the next few payments until we can get back on our feet (which is probably what we'll try first)

2. ask the trustee to give us a "forebearance" on a few payments and tack them on to the end. I do not want to do this option since we are already scheduled to make several large payments at the end due to our situation, and this would either make our plan go longer or give us payments that will be unmanageable.

3. stop paying all together, wait for our Chp 13 to get dismissed, then re-file a Chp 7---I honestly don't understand what the advantage is to this

4. convert to a Chp 7 now. He did mention that if we did this, we would be able to keep our house and one car, but probably not the other. I'm not sure I understand this, both of our cars are more than half way towards being paid off, we'd be upside down on both if we tried to sell them, we have very low interest rates on both, and our payments aren't exorbitantly high, if we went out and bought another car even if it were a cheaper car, our payments would probably be high due to the high interest we would have to pay. Definitely need more info on this.

He didn't mention anything about trying to get our Chp 13 payments reduced, though if we did the means test again with the lost of 50% of our income, my guess is that there really isn't going to be any disposable income. Other than our daycare costs, our expenses really won't be changing that much, so with the subtraction of daycare and the addition of unemployment wages, we'll still be probably $1500-$2000/month in the hole. But, my preference would almost be to stay in Chp 13 with a much reduced payment because my student loans are included in the plan, and if we go to a Chp 7, then I'll have to start paying them outside the plan, and the payments will probably be much higher than what I'll be able to afford.

So, I guess we'll wait and see what happens after we meet with him tomorrow. I'm actually amazed, a lawyer meeting with a client at 3:30 on a Friday afternoon in the summer---guess he isn't so bad after all!

[poor@budgeting]

Any updates? We could be in the same boat before the days end.