Bankruptcy and Unemployment

DuPage County Bankruptcy Lawyers Providing Guidance and Relief for the Unemployed

Losing your job is painful, particularly if you are already facing debt. Unemployment can be the main reason that individuals choose to file for bankruptcy. It is not required that you be employed to file for bankruptcy, but unemployment can affect whether you are eligible to file for Chapter 7 or Chapter 13 bankruptcy. At the Bankruptcy Center of Illinois, our bankruptcy and unemployment lawyers will analyze your specific financial situation and help you determine whether the court will approve your case. We assist clients throughout DuPage County as well as nearby areas, and are committed to providing effective representation tailored to your needs.

Bankruptcy and Unemployment

Each type of bankruptcy has its own advantages and disadvantages. Considering the best form of bankruptcy is important because it familiarizes you with the process and how the specific type of bankruptcy can assist your situation. One advantage to filing for bankruptcy is that an automatic stay will be triggered upon filing for Chapter 7 or Chapter 13 bankruptcy.

There are certain requirements that must be met if you are filing for Chapter 7 bankruptcy and are unemployed. The purpose of Chapter 7 is to help debtors without substantial assets. In most situations, individuals filing for Chapter 7 bankruptcy do not have non-exempt assets. Creditors are usually not repaid. Chapter 7 allows you to liquidate, or wipe out the majority of debt. However, certain debt is not dischargeable. This includes alimony, student loans, child support and taxes.

It is necessary to pass the means test to file under Chapter 7. Typically, if your income is below the median, and you pass the means test, you qualify. If you do receive unemployment benefits they are unlikely to place you over the threshold income for Illinois. An experienced bankruptcy attorney can help assess your specific situation.

If you have recently lost your job, it may be challenging to pass the means test. For instance, you must report your income during the previous six months, and if that figure is high, you will not pass the means test. In this example, waiting a few months will allow your average monthly income to drop. If you do receive unemployment earnings, you will be required to report these.

Chapter 13 Bankruptcy and Unemployment

If you have filed for Chapter 13 bankruptcy and become unemployed you may be unable to make payments according to your repayment plan. Chapter 13 bankruptcy works well for individuals with a regular income. Debtors repay all or some of their debts through a repayment plan. This option is set up for monthly payments. By not completing your payment plan, you will not receive a discharge. Your case may be dismissed by the court. It is possible that you qualify for Chapter 7 bankruptcy, which will be less challenging to complete.

If you are unemployed you can still file for Chapter 13 bankruptcy. You will be required to show you receive some kind of income that can support your repayment plan. An example may be an income through a rental or a business that can assist in funding the plan. Other income, such as income from unemployment benefits, or Social Security funds, these may be used to fund a repayment plan.

Discuss Your Bankruptcy and Employment Options With a Skilled DuPage Lawyer

It is important to understand that when you are unemployed and file for bankruptcy, you do have options. Consulting an experienced bankruptcy attorney before deciding whether to file under Chapter 7, Chapter 13, or not at all, is important. At the Bankruptcy Center of Illinois, our unemployment and bankruptcy attorneys can help you make an informed decision. To schedule a free consultation, contact us today by phone at (773) 993-0024 or complete our online form. We proudly represent people throughout DuPage County, as well as areas of Lake County and beyond.