Bankruptcy and Severance Pay
My question involves bankruptcy in the state of: Florida
As of April 27th, I will no longer have my job. As a result, I will be filing for bankruptcy as there is no way I can pay all of my debts. I will receive a severance package and the choice to cash in my pension.
I plan on calling a a lawyer but wanted to know quickly if anyone knew if my lump sum Severance will be counted as income since it's not permanent. Basically, would it hinder my filing as Chapter 7? Can they take it?
Thanks.
Re: Bankruptcy and Severance Pay
Are you asking if it will put you above the limit for the means test? Or are you concerned that you'll end up with a cash reserve that can potentially be reached by your creditors to satisfy your debts?
Re: Bankruptcy and Severance Pay
Both. To calculate the means test, they'd use past earnings even though it's not future earnings? Yes, it would create a cash balance so will they be able to take it to pay debtors?
Re: Bankruptcy and Severance Pay
If your severance puts you over the limit for the means test, you may have to make a special argument to the court that it's not "abusive" for you to file Chapter 7. If you have a large pot of cash sitting in a bank account, you should expect that a good portion of it will be applied to your debts.
Get a free consultation with a bankruptcy lawyer.