Legal Question in Bankruptcy in California

Re: Severance pay & chapter7

The answer to your question depends entirely upon the amount of assets you have and how much money you make. If you file before receiving the severance pay, it is a potential asset that must be listed. Whether you can protect the bonus from the trustee or your creditors depends on the amount of exemption money you have left that wasn't used to protect other assets.

If you file after receive th3e bonus, it might impact your income analysis for the purposes of the means test. The means test helps determined if you need to be in a Chapter 7 bankruptcy or a Chapter 13 repayment plan. If you don't want worry about filing a Chapter 13, then filing before receipt of the bonus might be better.

Finally, the fact that you are receiving severance pay means that you will soon be out of a job. Filing now might now be such a good idea. If you file now and then it takes you six months to find a job, you would be stuck with the debt that piles up when you are out of work.

You should contact a member of the National Association of Consumer Bankruptcy Cases for a consultation to more fully analyze your situation and to answer your questions.