Will my lump sum from severance pay affect my bankruptcy?
October 1st, 2014 by Questions
I am almost through the bankruptcy process…6 months left out of 21. Everything is going along fine and yesterday I get the news that the business I have worked at for 10 years is closing and I will receive severance pay. How drastically will receiving this lump sum affect my payments? Will this lump sum mean that I won’t be elligible to complete the process? I am worried.
Posted from: Ontario
One Response to “Will my lump sum from severance pay affect my bankruptcy?”
Please post a follow up comment below:
(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)
You must be logged in to post a comment.
October 01, 2014 at 7:27 am, Doug Stuive, CA | Trustee | CIRP said:
Receiving a severance package as an undischarged bankrupt will definitely affect the amount you are required to pay into your bankruptcy estate in order to receive your automatic discharge in the 21 month period. As you are aware you are required to pay your required surplus income obligation in full and the amount required is based on your average earnings during this bankruptcy period. The details of the severance package will determine just how the payments will be affected.
Without more information it is difficult to determine just how much this will affect your required payments. It is recommended that you contact your trustee as soon as possible to set up an appointment to discuss your options. The trustee will need to know how much you are receiving in total, the pay out time frame for these funds, and the number of weeks of income the severance package represents. With this information your trustee can complete a surplus income calculation and can determine the affect this severance will have on your total payment obligation. Once this amount has been determined the trustee can work with you to set up a payment schedule and can discuss any options that may be available to ensure your discharge is not jeopardized.