Whether a person is eligible to declare bankruptcy depends on several legal and financial regulations. It’s common to wonder if employment status has any bearing on the matter. Moreover, losing a job is what prompts many to consider filing for bankruptcy. However, if you’re unemployed, it can affect which chapter you qualify for. Here is what you need to know about pursuing a course of action in this scenario. 

Chapter 7 Income Qualification 

Chapter 7 bankruptcy is designed to help debtors with low income obtain a fresh financial start. To be eligible for this filing, you must pass a means test that shows your disposable income isn’t sufficient to pay your debts. If you are unemployed, there’s a good chance your earnings will be low enough for you to easily meet these requirements, even if you collect unemployment benefits. On the other hand, you may not qualify if you’ve just recently lost a high-paying job. The means test takes into account what you’ve earned for the last six months, and if it amounts to a large number, you won’t pass. 

Funding a Chapter 13 Repayment Plan 

Those who chose this option can reorganize their debts into a repayment plan. When filing for bankruptcy under chapter 13, you must prove that you can afford to make the plan’s payments. However, this can be difficult to do if you are unemployed and don’t have a regular income. In this case, you may not qualify unless you start working again and earn enough to satisfy the given financial obligations. 

If you are unemployed with mounting debt, filing for bankruptcy may be the ideal solution for regaining your financial footing. To determine the best course of action, turn to the experienced legal team at Greene Law PC. Their attorneys help debtors with both chapter 7 and 13 filings and have successfully guided numerous Farmington, CT, clients through the process. They will carefully review your situation and provide quality counsel about the next steps. Call (860) 676-1336 to schedule a consultation, or visit online for more information on the bankruptcy services they provide.