How Does Unemployment Effect My Ability to File for Bankruptcy?

Losing your job can be a huge, financial blow. Even if you have savings, you may only be able to get by for a few months or less on what you have. The longer it takes for you to find a job, the worse off things will be.

You may rack up a lot of debt while you are unemployed. You may turn to credit cards or personal loans to get by when you don’t have an income, and you may fall behind on important payments, including your mortgage. If you had any debt before your unemployment, the situation may be come even worse.
Bankruptcy may give you the debt relief you need while you are unemployed. But you may wonder whether you can even file for bankruptcy if you don’t have a job. Here’s what you need to know:

Chapter 7 Bankruptcy

Mesa Chapter 7 bankruptcy can liquidate your unsecured debts if you qualify. There is no limit on the amount of debt that can be discharged, but only certain debts can be discharged, such as credit cards, medical bills, and personal loans. You cannot discharge things like back taxes, child support, or student loans.

To qualify for Chapter 7 bankruptcy in Mesa, you have to pass a “means test,” which looks at how much money you make compared to the average income in your area and other factors, such as whether you are married or have children. The means test also looks at what assets you have available. So with Chapter 7 bankruptcy, not having a job is actually a bonus. If you have no income, you are almost certain to be able to pass the means test.

Filing for Chapter 7 bankruptcy can get rid of huge debt payments so you can make your savings stretch or do more with your part-time income or unemployment compensation. Know that any income you make or savings you have will be factored into the means test. Talk through all your financial circumstances with a bankruptcy attorney to determine how Chapter 7 will help you and how your finances will be impacted.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy filing near Mesa results in a debt reorganization plan. The bankruptcy court looks at your ability to pay and determines a new schedule for paying back your debt. You pay one debt payment, which is then distributed to your creditors. The repayment plan is usually three to five years, and it lowers your interest rate and even how much you eventually pay back your creditors.

If you are unemployed, you are probably going to have a hard time filing for Chapter 13 bankruptcy in Mesa. With no income, you really won’t have any ability to repay your creditors, and therefore, a debt repayment plan will be moot.
Chapter 13 bankruptcy is the better choice if you have fallen behind on mortgage payments and want to try to save your house from foreclosure. So if you are unemployed, not being able to file for Chapter 13 bankruptcy might be a problem. Again, it’s best to talk to a bankruptcy lawyer about your financial circumstances in detail so you can figure out the right strategy to meet your goals.

Filing for bankruptcy in Glendale can give you debt relief that can help you take control of your finances again. If you are unemployed, your finances and your debts may seem out of control. In addition to looking for a job, you should work with a Glendale bankruptcy attorney to determine your legal options for getting debt relief that can help you get back on track.

My AZ Lawyers is ready to help you if you are considering debt relief through bankruptcy. A Glendale bankruptcy attorney from our team will thoroughly review your finances and talk through your goals to get a sense for what you want to get from your bankruptcy. Your attorney will then recommend a course of action to help you get the most of what you want out of bankruptcy. Call us today to schedule a consultation with a dedicated bankruptcy lawyer who can help you understand your options. We serve clients throughout the Phoenix area, including in Mesa, Glendale, and Tucson.

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