Filing for bankruptcy is an intimidating prospect. Unemployment adds another layer of complexity to the situation. Can you file for bankruptcy if you don’t have a job?
To answer this question, let’s look at how filing for bankruptcy works and what other options may be available.
The Basics of Bankruptcy
Bankruptcy is a legal process that provides debt relief to individuals who can no longer meet their financial obligations. It allows people to discharge certain debts or reorganize them into one manageable payment plan.
There are two types of personal bankruptcy: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Most people who don’t have a job opt for chapter 7 bankruptcy.
Chapter 7 bankruptcy allows you to eliminate certain debts without making any payments. To do so, you must pass the means test. This test determines whether or not your income falls below the state median income level.
If you earn more than the state median income level, then you will likely qualify for Chapter 7 bankruptcy protection.
Chapter 13 Bankruptcy
If your income does not fall below the state median income level, then you won’t be eligible for Chapter 7 bankruptcy protection. However, that doesn’t disqualify you from bankruptcy in general. You might qualify to file for chapter 13.
Under Chapter 13 bankruptcy protection, individuals reorganize their debt into one manageable payment plan based on their financial resources and circumstances. This payment plan typically lasts between three and five years and involves making regular payments until all of your debts are paid off in full.
If you can afford your monthly payments and the bankruptcy filing fee, you’ll likely qualify for chapter 13.
Paying for Bankruptcy
You might be wondering how you’ll pay to file for bankruptcy if you don’t have a job. Here are a few suggestions:
Credit Cards and Loans
In many cases, people use their existing credit cards or take out personal loans to cover their bankruptcy filing fees. This solution is best suited to those who have access to credit and are confident they will be able to repay it in full within a reasonable timeframe.
The bankruptcy court looks carefully at what you spend in the days and weeks leading up to filing for bankruptcy. Make sure you discuss this option with an attorney before moving forward.
Some courts allow payment plans for filing fees. This enables you to spread the cost of their filing fees over several months instead of paying upfront.
Your attorney can help you determine if this is an option for you. Keep in mind that courts may require proof of assets or financial resources before approving any payment plans. Make sure you have all of the necessary documents ready before applying.
Help from Family and Friends
Asking family members or close friends for help with your filing fee costs can be uncomfortable. However, it might be your best option.
When asking for help from loved ones, make sure that everyone involved understands the terms of the agreement beforehand. This way there are no surprises down the road. It’s also important that both parties treat each other with respect throughout the process.
And again, the bankruptcy court assesses your debts and determines which are priorities. Anyone you ask to help you pay should understand that they will likely not receive court-ordered creditor protection when lending you the money.
Filing for bankruptcy with no job is possible—but it isn’t easy. It’s important to talk to an experienced lawyer who can review your case and provide expert advice on how best to move forward with your financial situation. With the right guidance and support, filing for bankruptcy even when unemployed can be a real possibility.
For more information, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation with an experienced attorney.