Legal Question in Bankruptcy in Michigan

Re: severance pay

It is not a good idea to convert to a chapter 7 when you are receiving a lump sum payment of $40,000 because you won't be able to exempt it all and will have to turn the non exempt portion over to pay off creditors. You do not say what percentage of debt your plan is to pay off, but if it is a 100% plan, you could pay the balance of your plan with your severance pay and still have money left over and complete your plan early. If it's not a 100% plan, your options will vary based on your circumstances which you have not provided information about.

If you filed chapter 13 because you were behind on the house and are still behind on the house, converting to a chapter 7 will not help you keep your house.