Is It a Good Idea to File for Bankruptcy If You Are Unemployed?

They say that you have to have a job to get a job.  What do you do, then, if you have been searching for employment for months, but none of your applications or interviews has resulted in a job offer?  How do you avoid defaulting on the debts that keep piling up?  Will the creditors sue you, and if they win, will they garnish your non-existent paycheck, leaving you with even less than the negative amount of money you currently have?  By law, everyone, regardless of employment status, has the right to file for bankruptcy protection, but when you research bankruptcy filing in more detail, you may find advice to the effect that you should not file for bankruptcy protection unless you have a job.  It turns out that, if you are between jobs but still able to work, filing for bankruptcy protection may grant you some much-needed relief from debts you cannot pay.  To find out more about filing for bankruptcy when you have little or no income, contact a Philadelphia debt relief lawyer.

Chapter 13 Bankruptcy Is for People With Steady Employment, but Chapter 7 Is for Everyone

Federal bankruptcy law includes many different categories of bankruptcy protection, but the categories that include the vast majority of filings by individuals are chapter 7 and chapter 13.  In a chapter 7 bankruptcy case, you submit detailed reports to the court about your income, assets, and debts.  The court agrees to discharge the eligible debts, including unpaid medical bills and old credit card debts, but it has the right to sell some of your assets in order to settle your debts.  Certain items of property are exempt from liquidation in a chapter 7 case.  These include assets that you rely on for basic necessities, such as the house that is your primary residence, if you own a house, and the car that you use to drive to work, school, medical appointments, and errands, if you have a car.  Many applicants who file for bankruptcy protection under chapter 7 are able to discharge their debts without liquidating any of their assets, because all of the assets they own are exempt.

Chapter 13 bankruptcy cases do not involve the liquidation of any assets.  Instead, the bankruptcy court determines how much you can afford to pay per month on your eligible debts.  You follow this payment plan for three to five years, and at the end of this period, the court discharges the remaining balance of your debts.  People who choose chapter 13 bankruptcy do so because they can afford it and because they have non-exempt assets that they do not want to lose.  If you fail to keep up with your chapter 13 payment plan, the court converts your bankruptcy case to chapter 7.

Contact Louis S. Schwartz About Filing for Bankruptcy Protection

A Philadelphia consumer law attorney can help you make an informed decision about filing for bankruptcy.  Contact Louis S. Schwartz at CONSUMERLAWPA.com to set up a free, confidential consultation.

Sources:

debtorcc.org/first-bankruptcy-course.aspx

debtoredu.com/pre-discharge-bankruptcy-course.aspx