Got a new job after you filed bankruptcy?
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One of the most common reasons why North Carolina consumers file Chapter 7 bankruptcy is job loss. Nearly one-fourth of bankruptcy filers have experienced unemployment that ran them behind on their bills and led them to turn to bankruptcy to get out of debt. But what if you lose your job, file Chapter 7, and then get a new job? How will this affect your case?
Honesty In Filing Bankruptcy Is Critical
The first and foremost thing to bear in mind when filing bankruptcy is that you must be completely honest and transparent on your forms, petitions, and when talking to your bankruptcy attorney. Your lawyer can help you, and the system of laws and rules is there to protect honest consumers.
But it’s not just critical that you’re honest when you first file your bankruptcy but at every step along the way. If your circumstances change, you must notify your bankruptcy attorney, and this includes a new job. It may or may not affect your bankruptcy case, but neglecting to tell the court can mean trouble.
Median Income And Unemployment
One way that finding a job can impact your Chapter 7 bankruptcy is if your new salary is in excess of the median income for the state of North Carolina. The upside is that the bankruptcy court averages the last six months of your income, so if the job is recent, your income should still skew low.
Also, even if your new job pushes you above the state median income, your attorney can run you through the bankruptcy Means Test. If your average income compared to your living expenses and debts shows you are unable to service your debt on your salary, your petition should be in good shape.
If your new job came after you got your Chapter 7 bankruptcy discharge—which comes within a few months of your petition filing—you should still notify your bankruptcy attorney that you are now employed so they can decide if the bankruptcy court needs to be notified.
Typically, what affects a bankruptcy petition is what you know about your current and future finances at the time you file the petition. For instance, if you are owed money from an inheritance or lawsuit judgment, even if it hasn’t been paid yet, that must be taken into account. Future money from a possible job won’t play into it unless and until you are formally hired.
Case Conversion In Case Of Increased Income
If your new job pushes your income beyond the median for North Carolina and you no longer pass the Means Test, then your bankruptcy case can always be converted to a Chapter 13 bankruptcy. Chapter 13 also establishes a repayment plan to get your debts back on track, so it is a good alternative for those with a higher income.
For delinquent debts, you pay a monthly amount that is shared among creditors, usually for secured debts such as your mortgage or auto loan. Leftover amounts go to unsecured creditors such as credit card issuers and medical providers. At the end of Chapter 13, some portion of unsecured debts is usually discharged but not as fully as it would be in Chapter 7.
Full Disclosure Is Always Best
Not being completely honest with the bankruptcy court, judge, and trustee assigned to your case can result in fraud accusations. That’s something to avoid at all costs. Be transparent and truthful with your bankruptcy attorney so they can best advise you on your North Carolina bankruptcy.
To find out more about the debt relief offered by North Carolina bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 now for a free consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.