If you are overburdened with debt due to a recent job loss, you may feel
like you are running out of options. Fortunately, there is no requirement
that you have to be employed in order to file for
bankruptcy. In fact, this is the most common reason why people file. While being
unemployed may limit your options, in terms of what chapter you will be
able to file under, bankruptcy is still a viable option for those without
an income.
Call our firm today to
learn more about your options.
How a Lack of Income Could Affect Your Options
In some cases, being unemployed may actually make the bankruptcy process
easier—especially if you are filing under
Chapter 7. However, being unemployed could create certain problems if you are hoping
to file under Chapter 13. In a Chapter 13 bankruptcy, you would need to
create a “repayment plan” and show the court that you intend
to make regular, monthly payments over the next three to five years.
If you are not earning a consistent income, you may have a hard time getting
your Chapter 13 repayment plan approved. Luckily, you may still qualify
for Chapter 7 bankruptcy. Unlike
Chapter 13, Chapter 7 would provide immediate debt relief by wiping out most, if
not all, of your unsecured debts. Since the court is willing to forgive
more of your debt, however, you must first take the means test to see
if you qualify.
Qualifying for Chapter 7 Bankruptcy
To determine whether or not you qualify for Chapter 7, you will need to
take what is called the “means test.” This test will compare your household income against your state’s
median income for a household of the same size. If your income falls below
the median, you automatically qualify. If you are above the median, you
will need to show that you do not have enough disposable income to repay
your debts.
If you are currently unemployed, you will normally fall well below the
Chapter 7 income limits—even if you are currently collecting unemployment
benefits. So in this regard, being unemployed may actually make it easier
for you to file under Chapter 7. Not only will this process wipe out your
unsecured debts in just a few short months, but it will also give you
the chance to start fresh with a clean slate.
Would I be able to file for Chapter 13 bankruptcy?
Chapter 13 bankruptcy would require you to repay all or a portion of your
debts over three to five years, which is why this type of bankruptcy may
be preferable for debtors with a regular income. That is not to say, however,
that it isn’t possible for you to file under this chapter if you
are unemployed. If you are collecting unemployment, social security or
another source of income, you may be able to qualify.
Call Our Office Today for a Free Consultation
At Leonard V. Sominsky, ESQ., PC, we know that bankruptcy can be confusing—especially
if you have never been through this process before. We encourage you to
let our firm handle the heavy lifting so that you can focus on getting
your finances back on track. We have been assisting debtors throughout
Phoenix and all surrounding areas since 2000, helping thousands of individuals
and families along the way.
If you are ready to put an end to your debt, please contact our firm for a
free consultation. All calls are returned within 24 to 48 hours.