Statistics compiled by the Bureau of Labor Statistics reveal that 4.1% of Americans are currently unemployed. Without a regular income, many people face difficulties in keeping up with their bill payments. Many people in this situation discover that bankruptcy offers the opportunity to reduce financial hardships.
If you are currently navigating financial complications after unemployment, filing for bankruptcy can help to reduce and sometimes even eliminate many debts. While being unemployed might increase your chances of obtaining certain types of bankruptcy, not having a job can prevent you from qualifying for other types of bankruptcy. It is important for unemployed individuals to understand how their employment status can affect filing for bankruptcy. In most situations, it is also important to contact an experienced bankruptcy lawyer.
How Unemployment Affects Chapter 7 Bankruptcy
A person is not required to be employed to file for Chapter 7 bankruptcy. Instead, unemployment can often help a person qualify for Chapter 7 bankruptcy. The means test to qualify for Chapter 7 bankruptcy measures a person’s financial ability to repay creditors. If your income falls below the median income for a household of equivalent size, you will be considered to have passed the means test and be eligible for Chapter 7 bankruptcy.
Many people discover that passing the means test is challenging if you have recently lost a high-paying job. Even if you are not currently earning anything, you will likely be required to report the amount you received during the past few months, which means that you will not pass the test if you made enough. In many cases, waiting three to six months after losing a job enables a person to qualify for the means test.
How Unemployment Affects Chapter 13 Bankruptcy
A person does not need to be employed to file for Chapter 13 bankruptcy. Unemployment, however, can create some potential obstacles while filing for this particular type of bankruptcy. As part of the Chapter 13 bankruptcy process, a repayment plan is created between the person filing and the parties that are owed money. This plan must then be approved by the bankruptcy court. These plans often last between three to five years, and a debtor must make monthly payments. If the court decides that you lack enough disposable income, you will be required to file for Chapter 7 bankruptcy.
Speak with an Experienced Bankruptcy Attorney Today
Unemployment does not automatically make a person unable to file for bankruptcy. If you are unemployed, bankruptcy can be a powerful tool and a second chance to build your credit history. To find out more about whether Chapter 7 or Chapter 13 bankruptcy is a good option for you, do not hesitate to contact an experienced bankruptcy lawyer like attorney Jim A Lyons. Over the years, attorney Lyons has helped many people navigate the bankruptcy process and knows what it takes to make sure that your case resolves in a positive manner.