You can file for bankruptcy if you are unemployed. However, there are differences between filing a Chapter 7 and Chapter 13 bankruptcy. Chapter 7 is intended to wipe out unsecured debt for low income debtors with little or no assets, while Chapter 13 debtors pay back all or a portion of their debts with a 3 to 5 year repayment plan. Chapter 7 bankruptcy better suits individuals who are unemployed.
The Means Test
You will need to pass the means test to file, but being unemployed can make passing this test easier. The means test is based on your reported income levels for the 6 months prior to your bankruptcy claim. This means that being unemployed actually increases the likelihood of you qualifying.
The means test gives you the chance to indicate any special circumstances that might allow you to qualify for bankruptcy. Indicating that you are recently unemployed can be sufficient proof that you do not have enough money to repay your debts.
In a Chapter 13 bankruptcy if you have no income, the court will likely dismiss your case unless you can prove you are able to afford a bankruptcy plan. Also, if during your Chapter 13 bankruptcy your financial circumstances change (for better or worse) you are typically required to notify the court.
Before you choose to file for bankruptcy, you should first consider the following:
- How much debt are you likely to incur before finding a new job?
- Are you unlikely to qualify for bankruptcy if you start working again?
Other factors should also be considered before you file for bankruptcy. These factors are best discussed with an experienced attorney who is familiar with bankruptcy law. At The Buchalter Law Group, our team of lawyers has 35+ years of experience helping people overcome their financial difficulties. Let us find a legal solution that best suits your needs.
Call (321) 320-6088, or contact our Brevard County bankruptcy attorneys to get started on your free case evaluation.