Filing for Chapter 7 Bankruptcy While Unemployed: What You Need to Know
Unemployment can make a sticky financial situation even stickier. Chapter 7 is a potential way to get rid of your debt so you can make a fresh start, but there are some things you should know before you file.
At the Craig Black Law Firm, bankruptcy is my specialty. I take a personal approach to each case, even personally taking every phone call. If you're considering filing for Chapter 7, give me a call at 678-888-1778 or complete my confidential contact form.
Chapter 7 Eligibility While Unemployed
An important part of filing for Chapter 7 bankruptcy is the means test. To qualify for Chapter 7, you'll need to show that your income isn't sufficient to tackle your debts. Being unemployed can help you fall below the median income for your state, which is a large part of qualifying to file.
What about unemployment benefits? Yes, those benefits will count as income, but they likely won't be enough to exceed the income limits, so you'll probably still qualify. That's why it can make more sense to wait a while after you've lost your job, particularly if your income from that job puts you above the median income.
Key Considerations Before Filing
Chapter 7 bankruptcy can provide some relief, but it's not the best choice for everyone. Before you file for Chapter 7, here are a few things to consider.
- Bankruptcy will affect your credit. If your unemployment situation resolves quickly, you may still find your borrowing options limited. The good news is that you can rebuild your credit quickly after your Chapter 7 discharge.
- If creditors are blowing up your phone, a bankruptcy filing will put a stop to that, which can help you stay focused on your job search.
- A bankruptcy filing will discharge your debts, but you'll still have expenses. With limited income, you may find it tough to cover essentials like rent and car payments.
- Some employers run financial background checks on employees. A bankruptcy in your past could hurt your employment options moving forward.
- It's important to note that Chapter 7 bankruptcy means seeing many of your assets seized to offset the debt you're discharging. You should pay close attention to which property is exempt from seizure to understand what you stand to lose.
- Unemployment can be scary, but it's also unpredictable. You may find a new job quickly, at which point you'll be able to tackle your debt in other ways.
The Craig Black Law Firm and Chapter 7
Unemployment can be stressful, and Chapter 7 may offer some relief from that stress. It does come with some complications, though, so it's important to weigh all the pros and cons before you take that step.
The Craig Black Law Firm has experience with Chapter 7 and unemployment and can help you with your case. If you're considering filing for Chapter 7 bankruptcy, contact me by calling 678-888-1778 or filling out this confidential form to find out how I can help you.