One of the most common misconceptions about bankruptcy is that it is only for people who are unemployed or completely broke. In reality, many people who file for bankruptcy in California have steady jobs and regular income. If you live in Claremont and are struggling to keep up with mounting debt despite receiving a paycheck, bankruptcy may still be a viable path forward. At Law Offices of Terrence Fantauzzi, we help working Californians understand their options and take back control of their finances.
Employment Does Not Disqualify You
Having a job does not prevent you from filing for bankruptcy. In fact, many Chapter 13 filers are required to have regular income in order to qualify. The Chapter 13 process is built around the idea that you can make structured payments over time — typically three to five years — to satisfy a portion of your debts. If you are employed, that steady income is actually an asset when it comes to qualifying for Chapter 13 protection.
For Chapter 7, employment may factor into whether you pass the means test, but earning a paycheck does not automatically disqualify you. The means test compares your income to California’s median income for a household of your size. If your income falls below that threshold, you generally qualify. Even if your income is above the median, there are additional calculations that take into account your allowable expenses, which may still make Chapter 7 an option.
Why Working People File for Bankruptcy
There are many reasons why employed individuals find themselves in serious financial trouble. Medical bills following an unexpected illness or injury are one of the leading causes of bankruptcy in the United States. Credit card debt that accumulated during a period of reduced hours or a temporary job loss can quickly spiral out of control even after income is restored. Divorce, a failed small business, or a co-signed loan gone bad can also leave working people with debt they simply cannot manage on their own.
The fact that you are employed now does not erase what happened before. Bankruptcy exists to give people — including those who are currently working — a legitimate legal path out of debt that has become unmanageable.
What Bankruptcy Can Do for You
Whether you file Chapter 7 or Chapter 13, one of the first things that happens when you file is the imposition of an automatic stay. This immediately stops most collection actions against you, including wage garnishments, harassing creditor calls, lawsuits, and bank levies. For someone who is employed, the ability to stop wage garnishments alone can bring significant financial relief.
Chapter 7 may allow you to discharge a wide range of unsecured debts, including credit card balances and medical bills, giving you a clean slate to move forward. Chapter 13 can help you catch up on missed mortgage payments, protect assets you might otherwise lose, and set up a manageable repayment plan based on your income and necessary living expenses.
Talk to a Bankruptcy Attorney in Claremont
If you are employed and dealing with overwhelming debt, you do not have to wait until things get worse before seeking help. The team at Law Offices of Terrence Fantauzzi is experienced in helping working individuals throughout the Claremont area find the right bankruptcy solution for their situation. We will review your income, your debts, and your goals to help you decide whether Chapter 7 or Chapter 13 makes more sense.
Call (909) 552-1238 today to schedule a consultation and take the first step toward financial relief.
