Bills can become out of control quickly if you are facing a financial crisis. Whether the cause is a job loss or a steady debt accumulation, getting out from under your debt may feel impossible.
Bankruptcy may prove an option regardless of how you got into your current financial state. There is nothing present in the bankruptcy laws indicating that you need a job to file for relief. However, it may impact what route you take and your ultimate success.
The Chapter 7 means test
Chapter 7 bankruptcy wipes out debt depending on your income. In Chapter 7, the court uses a state income table called a means test. This compares your income over the previous six months to the state average for your family size. If you lost your job recently, you may still place too high on the means test to qualify for Chapter 7. However, if your unemployment has exceeded six months, you may proceed with this type of bankruptcy.
The income Chapter 13 requires
Chapter 13 is a different animal when it comes to helping you get out from under debt. This type of proceeding sets you up on a repayment plan to pay back some of your creditors. Your income plays a large part in setting up the payments for Chapter 13. Thus, if you do not have a job or any prospects, you may not qualify for this process. You may either have to wait until you find gainful employment or consider filing under Chapter 7.
Filing for bankruptcy under Chapter 7 or Chapter 13 will ultimately result in helping to get your finances back on track.