Unemployment Is One Of The Main Reasons People File Bankruptcy
There are many misconceptions floating around about bankruptcy. I hear them all the time talking with my clients. One of them is that someone has to be employed to be able to file bankruptcy.
I’d like to dispel this bankruptcy myth in true lawyer fashion: it depends.
If you are unemployed and are considering filing Chapter 13 bankruptcy, you may not be able to do so. Under the Bankruptcy Code, in order to qualify for Chapter 13, you need to have regular income. This does not have to be wages. It can come from other sources, even your spouse’s income. But if you have no income source whatsoever, your Chapter 13 plan will not be confirmed. What that means is that you might not have the opportunity to take advantage of Chapter 13 to catch up on your mortgage if you have fallen behind. In that case, you and your attorney will have to come up with other ideas, like loan modification, to allow you to hold onto your home.
Unemployment will not affect your ability to file Chapter 7 bankruptcy, however. Chapter 7 bankruptcy involves the liquidation of all of your dischargeable debts and may be your best option if you are going through a period of unemployment and can’t make ends meet.
There are all sorts of bankruptcy myths out there. An experienced bankruptcy attorney can help you cut through all of them and help you decide if bankruptcy is your best option.