Loss of Job
When a Debtor enters into a Chapter 13 bankruptcy, the trustee bases their plan payment on the income they are receiving at the time of confirmation. However, things happen during the pendency of the bankruptcy, such as loss of job.
When a Debtor loses a job, he needs to contact his attorney immediately to go over his options. The options will vary depending on where in the case the Debtor is and what is being paid in his plan. Most of the time, it is possible to lower the payments for a short period of time to allow the Debtor to get a new job or start collecting unemployment. It is not possible to eliminate the trustee payment altogether for a short period of time, but it can be lowered as low as $50-$100 depending on the circumstances. If a car is being paid through the plan, sometimes it is harder to lower the payment that much.
Cars are usually being paid a fixed rate each month, so the payment must be high enough to be able to pay that fixed rate along with any trustee fees that will get paid out of that money. If the payment is not high enough to pay the car creditor, the Debtor is in danger of getting an objection by the car creditor and the modification to lower the payment not getting approved.
The best thing to do is to contact your attorney as soon as you lose your job or have a huge cut in pay to go over some options. It is easier to help a Debtor when they stay in contact with you when something happens and try to resolve the issues before they become big problems. Remember, loss of a job or a huge cut in pay does not mean your case will get dismissed if you are unable to make the trustee payment. However, if you do not let your attorney know what is going on, it will result in the dismissal of your case if the trustee payments are not made and a modification is not done to reduce your trustee payments.
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