Losing a Job after Bankruptcy - Total Bankruptcy
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Losing a Job after Bankruptcy

One of the most traumatic events that can happen in life after bankruptcy is job loss. After all, many people view bankruptcy as the first step toward improved finances and financial habits. But losing a job after bankruptcy can sour even the best-laid plans.

Losing a Job after Chapter 13 Bankruptcy

Job loss after filing a Chapter 13 case can be particularly troublesome because Chapter 13 protection is dependent on the filer making regular payments according to a repayment plan. Here's a look at what Chapter 13 filers should expect in the case of job loss.

  • Contact your lawyer or trustee. For most filers, job loss means inability to continue payments on the repayment plan. If that's the case, it's crucial to contact the trustee overseeing the case to inform him of the situation.
  • Consider a Chapter 7 conversion. Some filers may have the option of converting a Chapter 13 case to a Chapter 7 bankruptcy case. In order to qualify for this conversion, filers must have already repaid creditors at least what they would receive in a Chapter 7 case.
  • Consider a Chapter 13 hardship discharge. If the Chapter 7 conversion is not viable, filers may have the option of a hardship discharge, which allows the court to close the case without completion. Filers must meet several criteria in order to be eligible for the hardship discharge, so consulting with a lawyer here is essential.

Losing a Job after Chapter 7 Bankruptcy

Job loss after a Chapter 7 bankruptcy can be problematic as well. Without regular income, it can be difficult to afford essentials like food, shelter and utilities. One potential problem is that Chapter 7 filers are only eligible to file for Chapter 7 protection once every eight years, meaning that any debt incurred during a period of job loss must be repaid at some point in the future.

Those who lose their jobs after a Chapter 7 filing may want to consider the following:

  • Collecting unemployment. This may allow a person to transition between jobs without accruing too much debt.
  • Contacting creditors or landlords. Alerting relevant parties to potential payment difficulties could allow a person to work out alternative payment plans.
  • Contacting a lawyer. A bankruptcy lawyer may be able to offer counsel about a recent Chapter 7 filer's legal obligations and options in the case of job loss after bankruptcy.

If you're ready to connect with a lawyer for direct answers about job loss after bankruptcy, please fill out this form. You can arrange a free, no-obligation consultation to learn about your options.

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