Will being unemployed prevent you from filing for bankruptcy?
Transcript:
Hi. Matt McArthur, Clear Counsel Law Group.
Had someone ask me the other day. "Am I able to file for Bankruptcy even though I'm unemployed?" The answer is yes and no. Chapter 7 Bankruptcy there's no minimum income requirement. In fact I just had a hearing the other day with an individual that was unemployed. He was collecting unemployment income. Even the unemployment income was unnecessary, part of his Bankruptcy case. There is no minimum income threshold in order to qualify for Chapter 7 Bankruptcy. All it really involves is you disclosing all of your assets, and a determination whether or not those assets can be liquidated, and then distributed to your creditors. Income, at least on the minimum side doesn't really come into play. You can make too much money to be able to qualify for a Chapter 7 Bankruptcy. There is an income portion to the analysis of a Chapter 7 Bankruptcy, but on the low end there's no requirements.
If you're thinking about filing for Chapter 13 Bankruptcy there is a requirement that you have regular income. When you think about what a Chapter 13 Bankruptcy is, its a reorganization of your debt. I like to explain it as a repayment plan to a portion, or all of your creditors. If you're making monthly payments to the Bankruptcy court you're going to be expected to have steady and regular income. Unemployment income, if you're receiving any unemployment compensation, is temporary in nature. Whereas the length of a Chapter 13 Bankruptcy is three to five years in length. That is not going to be considered sufficient income to be able to fund the regular payments that will be due during a Chapter 13 Bankruptcy. If you are unemployed and thinking about filing for Bankruptcy, Chapter 7 is most likely the option if there is one for you. However if you come in and see me I'll take a look at your specific situation, and we will go over a detailed analysis of what works best for you and your financial situation.
Hope to see you soon.
