Bankruptcy Protection for the Unemployed

If you are filing for bankruptcy while unemployed, you generally have one option available, which is to file a Chapter 7 bankruptcy.  In a Chapter 7 bankruptcy proceeding, you are agreeing to liquidate any assets to pay off and discharge your debts. This is different from a Chapter 13 proceeding, which occurs where a debtor agrees to pay off his or her debts pursuant to a payment plan. 

Usually, the Chapter 13 bankruptcy proceeding is not available when unemployed, since the individual is not making any income with which to pay off the debts.  Consequently, a Chapter 7 bankruptcy proceeding is generally the most appropriate option for filing bankruptcy while unemployed.

State Laws

It is crucial to check the state laws of the particular state in which you reside.  Every state has different laws applicable to the filing of bankruptcy by unemployed individuals.  For instance, some states have laws which apply to the length of time a person must be unemployed and how the person’s prior income must be calculated and on what basis.  Therefore, while this article presents a general overview of filing bankruptcy while unemployed, it is important to ascertain your state’s bankruptcy laws and to keep your particular state’s requirements in mind.

Getting Help

If you find yourself contemplating filing for bankruptcy while unemployed, you should consult with an experienced bankruptcy attorney.  An experienced bankruptcy attorney will not only be able to help you identify your particular state’s requirements, but also, the attorney will be able to assist you in determining the best bankruptcy option, based upon your unique facts and circumstances.  Moreover, an experienced bankruptcy attorney will have an innate understanding of the complexities of the bankruptcy law and be able to present your case in the most advantageous way.