If I File For a Chapter 13 Personal Reorganization and Later Lose My Job, Am I Stuck?

Posted on Mar 05, 2013 By Joshua C. Lawhorn

In relatively every case, the answer is no. A chapter 13 personal reorganization is a final chance for debtors to pay their debts while still retaining their property. Many times, people choose to take this action when they have fallen behind on their mortgage or car payments and are at danger of losing the property they worked so hard to acquire. However, a personal reorganization is also a perfect opportunity to relieve the stress of insurmountable medical bills, credit card balances, and any other type of debt that has become too much to handle.

Quite often, a person is worried about starting a personal reorganization when their future financial situation is not entirely clear. While every situation is different and it is imperative that a qualified attorney evaluate your position before making a decision, you do have options should you have a decrease in income or lose your job.

Plan payments for a personal reorganization are based not only on what you owe, but also on your disposable income – the amount of income you take home after payroll deductions and living expenses. Therefore, the court will take into account any decrease in your income. If this were to happen, your plan could possibly be modified to account for this decrease.

If you did happen to lose your job during a personal reorganization, there are still more options at your disposal. While you are looking for new employment, your attorney could file a motion to suspend your plan payments for a short period of time. Once you find new employment, you simply start back with your plan payments. If you find yourself unable to continue with your plan indefinitely and you are eligible for a chapter 7 discharge, you could convert your case and still maintain the protection of the Automatic Stay. Also, a debtor has the right to voluntarily dismiss their personal reorganization at any time.

The main thing to remember is that filing for a personal reorganization does not leave you without any options once you begin. Each person’s financial situation is unique and it is imperative that you speak with a qualified attorney before you make a decision. If you are interested in a personal reorganization or would just like to speak with someone with experience in the area, please contact our office nearest to you to set up a free private and confidential consultation visit with one of our licensed attorneys.