Setting You Up For Financial Success

Can I File If I Am Unemployed?

Our Kansas City Bankruptcy Attorneys Answer Your Questions

An unexpected job loss can take a tremendous toll on your finances. If you have been struggling to keep up with your expenses for several months, bankruptcy might provide you the fresh start you need. Although you don’t have to be employed to file for bankruptcy, you will also need to consider the likelihood of incurring more debt while on unemployment. A debtor does not want to file bankruptcy only to find themselves back in debt in a few months.

Chapter 7 Bankruptcy, Median Income & the Means Test

If you are unemployed, you will likely have an easier time qualifying for a Chapter 7 bankruptcy. This type of bankruptcy eliminates, or discharges, a majority of an individual’s debts. Dischargeable debts include items like credit cards, collection accounts, lawsuits, medical bills, repossessions, payday loans, personal loans, and overdue utilities. Non-dischargeable debts include child support, most tax debt, and, in the vast majority of situations, student loans.

To qualify for a Chapter 7 bankruptcy, a debtor must pass a “means test,” which compares the debtor’s gross household income to the “median” income mandated by the county in which you reside for a similar-sized household. If you are below the median income level, you should qualify for Chapter 7 debt relief.

If you are above the median income amount, you may still qualify for Chapter 7 debt relief. To do so, a debtor must illustrate there is no disposable income in their budget. This is accomplished by completing the means test. To start, the means test takes a debtor’s gross monthly income, and deductions are then made for taxes, insurance, living expenses, and a host of other IRS-mandated allowances. After all the deductions are applied, the means test produces your disposable monthly income. If the number is low enough, you should qualify to file Chapter 7 bankruptcy.

Chapter 13 Bankruptcy & Repayment

Similar to a Chapter 7 bankruptcy, a Chapter 13 bankruptcy will most likely discharge your credit cards, collection accounts, lawsuits, medical bills, repossessions, payday loans, personal loans, and overdue utilities. Chapter 13 bankruptcy can also be used to stop foreclosure proceedings on your property, stop garnishments, defer student loan payments, or reorganize your tax debt. Depending on the complexity of your case and the district in which it is filed, a Chapter 13 bankruptcy can be filed with little to no upfront fees. Chapter 13 sets up the debtor on a manageable monthly payment plan with the Trustee’s office. In this payment plan, a debtor will be required to pay back anywhere from 0% to 100% of his debt, depending on the household income and expenses.

Learn more about your options in a free initial consultation with Patton & Dean, LLC. Our experienced Kansas City bankruptcy attorneys can guide you through the entire process. Contact us at (913) 203-4786 now to schedule.

The Complete Bankruptcy Firm

Our Approach Sets You up for Financial Success
  • Before
    Listen to Your Story & Understand Your Situation

    Prior to working with you, we sit down to understand where you’re at in order to determine the best way to move forward with your case.

  • During
    Provide Representation During Bankruptcy Filing

    Throughout our relationship, you’ll be kept informed of the status of your case and understand your options in full to make educated decisions.

  • After
    Protect Your Credit at No Additional Cost to You

    The process does not end when your case concludes. We work with you to help you get back on the right track when it comes to your credit and finances.