Can I File for Bankruptcy if I’m Unemployed?

Bankruptcy, Bankruptcy Advice, Chapter 13, Chapter 7 Bankruptcy0 comments

Being unemployed does not prevent you from filing for bankruptcy. In fact, many people who file for bankruptcy do so because they cannot continue paying down debts after losing a job. While you are not required to find a new job before your case is approved, unemployment could present obstacles, depending on which kind of bankruptcy you file.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is intended to relieve you of unsecured debts, which are loans given without backing by collateral or a guarantor, such as credit card debt and student loans. You will likely not be required to pay anything back to your creditors if your household income is lower than the median income in your state. If you currently have no income, your chances of qualifying for this form of bankruptcy are good. (Keep in mind that your secured debts, such as mortgages and car loans, will not be dissolved under Chapter 7.)

Chapter 13 Bankruptcy

Chapter 13, on the other hand, allows you to pay back a fraction of your debt over a 3-5 year period. If you don’t have an income to base your repayment plan on, or you lack the means to continue making payments of any size, your case is unlikely to be approved. However, you may be able to use Social Security, unemployment benefits, savings, or other income. If you can prove such sources are sufficient to afford your proposed repayment plan, Chapter 13 bankruptcy may be an option regardless of whether or not you are currently employed.

Experienced Bankruptcy Lawyers in Harrisburg

If you have recently fallen on hard times and are increasingly burdened by large debts, let our experienced legal team at Dethlefs, Pykosh & Murphy Law help you decide on the next steps. Our Harrisburg bankruptcy attorneys are here to help you evaluate your options and take the next steps forward.

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