If you're like most people, you don't wake up every day expecting to lose your job, but sometimes, things happen that are beyond your control. If you've recently lost your job, you may find that keeping up with the bills and credit card payments is becoming increasingly difficult.
Knowing what to do next isn't always easy – especially if you've never been down this road before. Depending on your situation, filing for bankruptcy may be the best option to help you get on your feet again and move forward. If you're in a situation where you're struggling with debt, the best thing you can do is to meet with an experienced bankruptcy attorney.
If I Don't Have a Job, Can I Still File for Bankruptcy?
The short answer to this question is yes; you can file for bankruptcy if you're currently unemployed. There is no law that prohibits people who are unemployed from filing. In fact, job loss is one of the most common reasons people file for bankruptcy. However, it's important to understand that unemployment can have an effect on your case, and you need to take a look at your entire financial situation before filing for bankruptcy.
Chapter 13 bankruptcy is a reorganization bankruptcy designed for people with a steady income who can pay back a portion of their debts through a repayment plan that typically lasts three to five years. People who don't qualify for Chapter 7 often qualify for Chapter 13. Chapter 13 allows debtors to catch up on mortgage debt, get rid of a second or third mortgage, pay down car loans, or pay back non-dischargeable debts such as child support.
In Chapter 13 bankruptcy, there are some debts that must be paid in full, such as student loan payments, child support, and back taxes. Other types of debt can be paid in part and in some cases, not at all. You don't lose your property in Chapter 13, but you must have a sufficient income in order to make your required monthly payments. If you don't have a job that provides a steady income, you likely won't be able to propose a repayment plan that will be approved. Until you can find another job, Chapter 13 probably isn't an option for you.
Chapter 7 bankruptcy is the most popular type of bankruptcy, and it is designed to wipe out unsecured debts such as credit cards and medical bills. In order to qualify for Chapter 7, you must first pass the means test. The means test determines whether your income is low enough to qualify for Chapter 7.
In Chapter 7 bankruptcy, you are required to give up any non-exempt property that you own. In other words, you must give up any property that is not protected by state or federal law. In most states, you can exempt some equity in your home, car, clothing, furniture, and other household items. If you own any valuable nonexempt property, the bankruptcy trustee may take it and sell it in order to pay back money to your creditors. In most cases, creditors don't receive much money – if any at all – because most people don't have any non-exempt property that can be taken and sold. In Chapter 7, you don't have to propose a repayment plan or have a steady income in order to qualify, and being unemployed won't hurt your case.
If you're unemployed and are considering filing for bankruptcy, the best thing you can do is to meet with an experienced bankruptcy attorney who can advise you as to whether bankruptcy is the best option for you.