When a person is already deeply in debt and loses their job, it can feel as if they are drowning with nothing to save them. When people find themselves in this situation, they may wonder if bankruptcy is a viable choice. The truth is that it might be a viable choice for debt reduction. If you find yourself in this situation, read on for more information, then call Law Offices of Terrence Fantauzzi for a free bankruptcy consultation at (909) 552-1238.
Is it necessary to have a job in order to file for bankruptcy?
The Bureau of Labor Statistics recently issued its most recent unemployment figures, which revealed that roughly 4.2% of people in the United States are unemployed, with California’s percentage higher at 7.5 percent. When someone loses their work but still has expenses to pay, a single unexpected auto repair bill or medical payment might completely crush their finances.
The good news is that bankruptcy may be a viable option. Nobody should have to fight to make ends meet day after day. If you find yourself in this dire circumstance, you may need to learn more about bankruptcy filing.
You have two basic bankruptcy options: Chapter 7 and Chapter 13
Although there are more than a dozen different types of bankruptcy, most people’s options are limited to Chapter 7, often known as liquidation bankruptcy, or Chapter 13, also known as reorganization bankruptcy. Both will help you get out of debt, but in very different ways. The fact that you’re unemployed may be a benefit in a Chapter 7 bankruptcy, but it may be a negative in a Chapter 13 bankruptcy.
An unemployed person’s Chapter 7 bankruptcy is put to the test
You’ll have to go through a means test if you want to file Chapter 7 bankruptcy in California. It basically analyzes your ability to pay back your debts. If your income is less than the median for a comparable sized family – which is nearly always the case if you’re unemployed – you’ll pass the means test and be eligible to file Chapter 7.
Means testing will consider your gross income for the previous six months. As a result, you may not want to file for unemployment benefits right away. If Chapter 7 is the best option for you, you can rely on us to provide guidance on when to file.
For a jobless person, Chapter 13 bankruptcy is a challenge
Though there is no rule prohibiting an unemployed person from filing Chapter 13, this alternative essentially reorganizes debt and pays it back. The filing must be approved by the courts, and they must feel that you have the financial means to repay the debt. It will be tough to demonstrate that you are unemployed.
The bottom line is that if you believe bankruptcy may be beneficial to you, you should contact Law Offices of Terrence Fantauzzi for a free bankruptcy consultation at (909) 552-1238.