Can I File For Bankruptcy If I Collect Unemployment?
Short Answer: Yes.
Income from unemployment is counted as income to the individual when determining whether you qualify for the bankruptcy. Typically, for a Chapter 7 bankruptcy, unemployment income will not be enough income to cause a problem for an individual getting ready to file. For a Chapter 13 bankruptcy, the court wants to see that you will be able to make your monthly payment under the repayment plan. Sometimes, income from unemployment is not enough to establish this.
The Means Test
Individuals filing bankruptcy need to pass the Means test. The Means test compares your annual income to the median annual income in your geographic area. If the filing individual’s total annual income (including unemployment income) is lower than the median annual income, you should qualify for a Chapter 7 filing. This will of course enable you to eliminate credit card debt, medical bills and other debts you’re currently obligated to repay.
If your total annual income exceeds the median annual income, you may still qualify. Your attorney will run a comparison of your monthly income to the monthly service on your debts as well as other monthly living expenses. Again, most unemployment income qualifies an individual under the Means test. In the alternative, your normal monthly expenses will typically still allow you to file—you’re demonstrating to the court that with your current income, you’re unable to comfortably pay your monthly living expenses.
Unemployment Income And Chapter 13
The bankruptcy court wants to see that you’ll be able to make your monthly payment in a Chapter 13. This requires a showing that you have sufficient income. Your unemployment will count as income, together with any other monthly sources of money which are counted as income in this analysis: social security payments, rental income, etc.
What If I Get A Job During Bankruptcy?
If you find a job during bankruptcy, congratulations are in order. Beyond that, we will notify the court of your changed circumstances, because we have an obligation to do that. In most cases, finding a job can only help you, especially if you’re filing a Chapter 13.
Speak With An Attorney
The easiest way to get a quick analysis of your situation is to speak with an attorney. Call me at 704.749.7747 for a free consultation by phone, or in my office. Or, if you’re more comfortable, email me HERE. I’ll get back to you quickly and help you understand your options.
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