My income is going down – do I still have to file chapter 13?

21 May My income is going down – do I still have to file chapter 13?

Many people are losing their jobs these days. For example, car dealers are closing their doors everywhere.So are auto factories. People who used to make a very nice living are really struggling. Their income over the past few months might have been above the national average. But it won’t be for much longer.

These people are better off waiting a little while before filing their chapter 13 cases. We have to look at the income that people have earned over the most recent six months to determine if the court will presume that is an abuse if you file a normal bankruptcy case under chapter 7. We often can overcome that presumption but sometimes, that is difficult.

On the other hand, if it is rather clear that you are going to lose your job or that your income is going to go down, there are many good reasons to wait to file. The most important one is that your income will be lower than the national median and then you will be able to file a chapter 7 case without anyone complaining about it.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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