Today’s entry is the first part in a new series of frequently asked questions. These are questions that lots of people ask and often times need only a brief answer. One of the most frequent questions that I get asked by new clients wanting to file a Chapter 13 bankruptcy is what happens if they were to unfortunately lose their job. In this economy, that is certainly a legitimate concern.
What I tell my clients is that if you or a spouse loses a job and miss a payment is that you first need to get on the telephone and schedule an appointment to meet with me as soon as possible. You should do so even before you miss that first payment, and do so as soon as you know there is going to be a problem. If you miss even a single payment into your case it can adversely affect the outcome. The more payments you miss, the worse the risk of the case failing. Because of this, you need to let me know exactly what is going on, so that together we can come up with the best method of dealing with the setback.
The first option we have is to file a motion with the Court asking your judge to suspend your payments for a short time while you find another job. If you think you will have another quickly, hopefully we can request a short suspension of only a month or two, which may not result in your plan payments going up very much or at all. This will depend entirely on the facts of your particular case however.
The second option we have is to file a motion requesting the Court’s permission to extend your case longer than it currently is set to be. So if you filed your case as a 36 month case, we can suspend your payments for a short period and then extend the case’s length so that you can keep your payments at the same amount. This is not always possible, but it is another option that we can review in this type of situation. We also cannot ever extend a case beyond 60 months.
All of this can be boiled down however to say that you must keep us informed at all times if you have a job loss or pay cut or some other event that affects how much or even whether you can pay into your Chapter 13 bankruptcy case at all. We can handle bad news when it happens to you, and take action to minimize its impact on your case. But when you don’t keep us in the loop and let a bad situation drag on without dealing with it, client’s cases suffer. The worst thing that you can do is simply stop making payments into your case and not let us know about it. Just remember that when you hire us to represent you in a bankruptcy, we are here to shoulder the burden with you. But we need your help to give you the best representation that we can.