Monday, May 22, 2017

Can I Switch Jobs During A Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a form of bankruptcy that reorganizes your debt. In a Chapter 13 case you will come up with a repayment plan for Court and creditor approval, and once approved will begin making payments to the Chapter 13 Trustee. The Chapter 13 Trustee will then turn around and disburse payments to your creditors, in whatever amount they are entitled to receive according to the Court approved plan. In order to do this, you need a steady stream of income, or you will not be able to come up with the money needed each month to pay the Trustee. Most times this stream of income comes from employment, but as we all know, jobs can be lost pretty quickly in this economy. Any time you are out of work, your first priority becomes finding a new job and if you are in the middle of a Chapter 13 bankruptcy you will need to get a new job fast.

You are allowed to change jobs during a Chapter13 bankruptcy, but doing so can create some of the following complications:

         A lapse in steady income, which makes it hard to keep up with your monthly Chapter 13 Plan payment.
         A reduction in income, which can make it impossible to pay the amount you’ve been ordered to pay to the Trustee each month.
         The need to have an income assignment in place, which means part of your paycheck will automatically be sent to the Trustee and your pay will be reduced by that amount. This can be a hassle for employers and takes a little bit of the control out of making payments out of your hands.
If you experience a reduction in your income, you can ask that the Court approve a modification of your plan to take your new income level into account. You might also be eligible to convert to a Chapter 7, and eliminate all of your unsecured debt rather than pay part of it back as required in a Chapter 13. If you are nervous about your job stability, or have learned of an opportunity you feel is better suited to your talents, don’t let a bankruptcy hold you back from getting a new job. But before you do, let us help you by making sure the transition is smooth and that your bankruptcy case will not be adversely impacted.

If you have more questions about bankruptcy, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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