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Single person, losing job soon (staff reduction), will collect severence, when to file 7? or must I file for 13?

Mesa, AZ |

Approx $2100 monthly take home for 8mos severance (after 19yrs same co). Approx $19k credit debt + only owe $10k on car worth $18,000 (keeping car, put down $14k). My credit is fair but won't be able to afford per month: Rent $700, Utilities $140, Credit bills $700 (3 creditors), Car Note $260 mo (0% interest, 3 yrs left), Bundle on phone, cell & internet $210 & $ food as needed. $120. in bank. May have to relocate to family (IL) to reduce rent to $200mo. Best to file bankruptcy as soon as I lose job (in about 1 month) to avoid paying the $700 in credit cards? Would I have to wait until severance runs out before filing? Can't live in AZ without a $42k yr job (H.S Edu only). Thinking of filing on 3 creditors only- not late on pymts YET, I 'd like to avoid that (moving forward).

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Attorney answers 5


Even given the circumstances above, you may be able to fit into a Chapter 7 filing. There are several factors involved in income calculation, and more than just what you have made in the last few months. Ideally, it sounds (reads) like you should file in Arizona.

You may be able to file before you lose your job, and therein start moving forward with a fresh start even sooner. Also, there are restrictions when it comes to "declaring creditors."

Feel free to give me a call for a no cost, no expectations consultation.

Good luck.

Scott A. Mac Leod is licensed to practice law in Arizona. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.


I would take Mr. Macleod up on his offer.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: for more information about my services.


I would let your creditors know that you are losing your job and will not be able to pay your debt. Put together a budget of essential expenses (food, housing etc.) see how long you will be able live.

I would not file for BK now because your car might be over the exemption. Move on because you might be able to get back on your feet. Then, you would be able to settle with your credit card companies.


Bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. I am attaching a link to some free videos that explain how bankruptcy works. Most Arizona consumer bankruptcy attorneys offer a free consultation about the basics of bankruptcy.

Please take time to educate yourself about bankruptcy and to determine which attorney is the best to assist you in the process. Don’t assume the attorney is being completely honest about their experience and capabilities. Check them out. Avoid the attorneys who advertise on TV or profess a 100% success rate in their Internet ads. It costs hundreds or thousands of dollars for these ads and someone has to pay for them – the clients. These attorneys mass produce the work and do not offer the client the hands on assistance that is necessary in a well-planned bankruptcy. Normally these firms assign all or most of the work to paralegals and the client rarely talks to an attorney.

When interviewing the attorney ask them how long they have practiced bankruptcy law. Ask what percentage of their practice is focused on consumer work. Ask whether they are experienced in both chapter 7 and chapter 13 cases. Ask the attorney for references. Ask about their policy of returning phone calls. They should be committed to answering specific questions about your situation and help you understand your options. If, after talking with them you are still confused about the issues you raised, find another attorney. Check them out with the various ranking sources: such as, and the State Bar. An attorney is should be your guide through this process. They should educate you, be there to assist you in how to avoid pitfalls and help you plan for your future after bankruptcy. There are hundreds of “bankruptcy” attorneys in Arizona. Of those just a few will fit the criteria set forth above. Again, bankruptcy is a very complicated process and you want to use an attorney who will be there when you need them.

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This firm is in the business of helping people and companies file for bankruptcy protection. Therefore, the bankruptcy code requires that we call our firm a "debt relief agency." This information is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the related issues. Nor is this advice intended to create a client - attorney relationship. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state or locality regarding specific information.


Once you have found a bankruptcy attorney you like and trust, you should talk about the timeline that will benefit you the most. While you want to put your financial stresses behind you, there are good reasons to hold off until your situation stabilizes. You can likely stop paying your credit cards now and use that money to take care of your immediate needs. Under these facts, I don't think that either negotiating settlement with your creditors or considering a chapter 13 would be a good plan for you. Good luck!