Losing a job is one of the top reasons that people have to file for bankruptcy. Without a consistent source of income, people are often unable to pay their bills or to pay them on time. The late fees start to add up, making it even harder for them to pay what they owe. Many people also turn to credit cards or personal loans to pay for what they need, and that creates a negative cycle that causes even more financial problems.
It can seem like you are in a losing battle when you are unemployed and are struggling with debt. You may turn to a bankruptcy attorney in Gilbert and start thinking about your options for debt relief through Chapter 7 bankruptcy or Chapter 13 bankruptcy. But you may be worried that if you don’t even have a job, you might not be able to file. And then what are your options? Fortunately, you do have some choices, and your bankruptcy lawyer will help you understand how the law applies to your circumstances.
Chapter 7 Bankruptcy
In order to qualify to even file for Gilbert Chapter 7 bankruptcy, you have to meet what is known as the “means test.” This is a complicated test that looks at your income in comparison to local standards, as well as your assets and your debts. If you make too much money, you won’t qualify to file for Chapter 7 bankruptcy, which is designed to liquidate most of your unsecured debts, such as credit cards. If you have too many assets, such as a lot of equity in your personal home or a vacation property, you won’t qualify to file for Chapter 7.
If you are unemployed, this can actually be a bonus in terms of qualifying for Chapter 7 bankruptcy. You can’t exceed the income limits if you don’t have any income. Unless you have other sources of money coming in, you are almost certain to qualify for Chapter 7 if you are unemployed. That means that you’ll be able to get your unsecured credit cards, medical bills, and personal loans discharged within a few months.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is what is known as a “reorganization” plan. Instead of discharging debts, it combines them and puts you on a three- to five-year repayment plan to make it more affordable for you to pay off your debts. Some debts may be discharged at the end of the term, but the goal is to get you to pay what you can during that time.
If you are unemployed and have no money to pay your debts according a proposed repayment schedule, it’s not likely that you will be approved to file for Gilbert Chapter 13 bankruptcy. However, your bankruptcy attorney may still be able to get you approved if you have other sources of financial support, such as disability income, alimony, or Social Security.
If you aren’t able to file for Chapter 13, your bankruptcy lawyer may suggest you file for Chapter 7 instead. The decision may get complicated if you are trying to save your house from foreclosure, which can’t be handled with Chapter 7, or have some other special considerations. It’s important that you talk through your finances thoroughly with an experienced bankruptcy attorney so that you can understand how bankruptcy will impact your options and the choices you have. Your bankruptcy attorney can help you come up with a plan that will get you the most debt relief while also protecting certain assets or future goals. Your attorney will try to find the right balance for your needs.
Contact Gilbert Bankruptcy Lawyers if you are struggling with debt and want to learn more about your options. We are an established bankruptcy law office with lawyers specializing in individual and corporate bankruptcy. A bankruptcy lawyer from our team can help you understand the ins and outs of Chapter 7 and Chapter 13 bankruptcy to determine how they might help you get back control of your finances and get your life back on track. We’ll explore all your options, whether you’re unemployed, have a house in foreclosure, are getting divorced, or are facing any other circumstances. Call us in Gilbert to talk to a bankruptcy lawyer today!
Gilbert Bankruptcy Lawyers