How to handle bankruptcy payments when your income drops

Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney

Reality Can Stink.

You had some hard times and ended up filing a Chapter 13 bankruptcy. Maybe you fell behind on your mortgage or car payments. Perhaps, you had large tax debt. Maybe it was an illness or accident that put you behind. But now you are back on track, you have been making your mortgage payments and your bankruptcy payments. Things have been going well. Then it happens. Your income comes down. Maybe your hours are cut back. Maybe you can’t work as much do to medical issues. Maybe your spouse lost a job. Whatever caused it, you no longer have as much money coming in as when you filed your bankruptcy. Reality can suck. So you contact your bankruptcy attorney to see if you can lower your bankruptcy payments.

We understand that life happens and sometimes you face a loss of income. When there is a change in your income, we are happy to take a look at what can be done. The first thing we will need it your current income information and an updated budget. However, frequently when we get this information from clients, we see that they have lost income but they have increased their living expenses. Unfortunately, when you lose income you have to reduce your expenses. I know, it is hard to cut back but reality can stink. It seems obvious that if your income goes down, you have to find ways to cut back on your living expenses, but that is not what is happening in many cases.

If you have faced a loss of income for whatever reason, you must make the difficult choices about what you can do without. If you cannot find ways to reduce your living expenses, then you have to find ways to increase your income. Before I went to law school, I managed a day care. We had a drop in enrollment one year so the owners decided that I should be able to manage the day care while only working half days. Naturally, they cut my salary in half. I knew that we had to have additional income so I took a job working as a cashier at a grocery store. I had a Master’s Degree but I was willing to take a job paying just above minimum wage to make ends meet. They were willing to work around my schedule with my other job so I made it work until I went back to work fulltime. Was it fun? No, but reality can suck. It was hard and made for long days and long weeks as sometimes I worked 7 days a week. But we had enough income to meet our basic needs and some extras.

There are many ways that you can supplement your income or reduce your living expenses. I did a series of articles in our newsletter two years ago about ways to reduce your expenses: https://www.hamptonroadslegal.com/library/July-Newsletter.pdf and ways to increase your income: https://www.hamptonroadslegal.com/library/August-Newsletter.pdf. Check it out for some tips. If you have a tip on a great way to cut expenses or increase income, share it with us for a chance to win a prize.

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