Loss of a job is a leading reason many people turn to bankruptcy. There is no stipulation that a person needs to be employed to seek financial relief. Depending on the type of bankruptcy you choose, unemployment may not be a concern. A bankruptcy professional can help you work out the best option for you.
How Does Unemployment Affect Chapter 7 Bankruptcy?
Chapter 7 bankruptcy involves asking the Bankruptcy Court to issue a discharge of debts in exchange for giving up assets the law says that you don’t need for a fresh start. Most people keep everything they have through a Chapter 7 case, but it is possible that some non-exempt assets could be liquidated to pay a percentage of your debt. A lack of income will not significantly affect your ability to file a Chapter 7. Even if you are receiving unemployment compensation, it may not put you above the average household income on the means test. The means test is an income-based test that determines if you are presumed to be eligible for a Chapter 7. Too much income may mean that you are not eligible for a liquidation bankruptcy. Therefore, a period of unemployment may improve your ability to file a Chapter 7.
What Happens If I Lose My Job During My Chapter 13 Bankruptcy?
Chapter 13 bankruptcy allows applicants to repay a percentage of debts under a Court ordered plan over three-to-five-years. Because ongoing income is necessary to keep up with payments, unemployment can adversely affect your ability to stay in a Chapter 13. However, in most cases where the period of unemployment is short, we can make arrangements to get plans back on track.
Are Unemployment Benefits Considered Income?
Unemployment benefits can help keep a Chapter 13 bankruptcy afloat for the short term. However, another source of income such as a job or social security is needed to remain eligible to stay in a Chapter 13.
If My Chapter 13 Case Gets Dismissed, What Can I Do?
A bankruptcy professional may suggest switching over to Chapter 7. Or, in some cases with new employment, we can re-file another Chapter 13 bankruptcy to accomplish certain goals like catching up on a car or house.
Sawin & Shea – Indianapolis Bankruptcy Attorneys
Losing your job can send you into a spiral of emotions and bad decisions. Having a bankruptcy professional in your corner can get you back on the right track. Consult the Indiana bankruptcy attorneys at Sawin & Shea to determine the best options available. With years of experience representing good people in bad financial situations, we can answer all your questions. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.