Filing Bankruptcy When Unemployed
Being in a tough financial situation can make decision making a challenging process. Unemployment often doesn’t make things any better. While many who are unemployed think it is impossible to file bankruptcy, depending on your situation it may make sense to file when you gain employment.
Review your situation in detail with a qualified bankruptcy attorney. One of the first steps in filing should be to consult with an attorney. A legal representative can review your situation in detail, let you know what to expect and options available if you are unable to hire legal help at this time.
There are multiple chapters related to bankruptcy but the most common chapter one would consider during unemployment is Chapter 7 bankruptcy . This chapter discharges or wipes away qualifying debt and this chapter may be easier to file while out of work. Chapter 13 bankruptcy develops a payment plan to repay debt obligations.
There is what is called a “mean’s test” that determines eligibility for Chapter 7 bankruptcy. This may include reviewing income earned over the last 6 months prior to filing such as earned income from a job or unemployment benefits. This could have a big effect on someone who has recently become unemployed and whether or not they are able to file.
If you are facing a debt lawsuit, bankruptcy may help stop legal action from progressing against you. In many situations, it may make sense financially to file, especially if all other options have been considered.