By Robert J. Semrad | Published January 15 2015 |
Can I File for Bankruptcy if I’m Unemployed?
The stress of being in debt is exacerbated if you are also unemployed. How can you repay your loans if you don’t have a steady income? Don’t worry – you still have options. You don’t have to be employed to file for bankruptcy. You can still file without having a job, although it may complicate the process.
When filing for bankruptcy, your must determine which type is right for you. Even if you are unemployed, you still have options. Your success may depend on if you choose to file for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy allows debtors with low income to discharge their debts and get a fresh start. In order to file for Chapter 7, you must pass the means test to determine if your income is low enough. The means test compares your average income from the last six months to that of similarly-sized households in your area. If your income is below average, you automatically qualify for Chapter 7. If you are unemployed, there is a good chance that you qualify based on your lack of income.
In Chapter 13 bankruptcy, debtors set up a three-to-five-year repayment plan to pay back some or all of their debts. With Chapter 13, you can catch up on mortgage payments, eliminate second mortgages, pay back non-dischargeable debts and more. While filing for Chapter 13 has many benefits, not having a regular income could hinder your ability to fulfill the repayment plan. However, you can use unemployment benefits or social security to pay off your debts. If you can show the court that you can afford to pay your debts, you can file for Chapter 13.
Which type of bankruptcy you choose depends on your personal situation. If you have no income at all, Chapter 7 is probably the better option. If you have some income and want to pay back your debts, Chapter 13 may work for you.
A bankruptcy lawyer can help you determine which type of bankruptcy is right for you. When you are unemployed and looking to relieve your debt, turn to DebtStoppers in Chicago for help.