If you are out of work, then you may be unable to pay your bills. This is especially true if you have been unemployed for a long time and are having trouble finding a new job. If this is your situation, then you may be thinking about bankruptcy. Bankruptcy will stop those annoying creditor calls and collection efforts and will allow you to either eliminate or restructure your debt so you can get some breathing room. However, you may be wondering, just how do you file unemployed bankruptcy and what is involved in the process?
Filing Unemployed Bankruptcy
There are two major types of bankruptcy available under the US Bankruptcy code:
- Chapter 7
- Chapter 13
Chapter 7 bankruptcy is probably what you are looking at if you are unemployed. Under Chapter 13, which is sometimes called the working man's bankruptcy, you are put on a monthly payment plan that lasts between three and five years and you still have to make monthly payments on your debt. If you don't have income coming in, that is pretty hard to do.
A Chapter 7, on the other hand, allows you to discharge all of your debt. You have to make under a certain income amount (either the median income in your state or by passing a means test) to qualify... but if you have no income coming in, then you are probably eligible. With Chapter 7, your non-exempt assets are sold in a sheriff's bankruptcy sale and the creditors are paid from the proceeds of that sale. Any remaining debt (with the exception of debts that bankruptcy can't get rid of, like tax debt) is then forgiven and you get to start out with a fresh set of finances.
The Process of Filing
Once you have decided that filing Chapter 7 is right for you, there are a plethora of forms you have to fill out. You usually have to list all your assets- don't hide any or try to turn non-exempt assets into exempt assets, or your bankruptcy can be dismissed. You also have to list all of your creditors, any co-debtors, and provide a whole host of other financial information. Your case will be heard in court, creditors will have a chance to object and the trustee assigned to your bankruptcy will conduct the sale and distribute the cash to creditors. Then, your debts will be discharged and you can concentrate on finding a new job instead of on dealing with debt collectors.
Getting Help
If you are unemployed and facing bankruptcy, consult with an experienced bankruptcy attorney as soon as possible. Your attorney can explain all of your options to you and can help you to ensure that you follow the proper procedure to get your debts discharged and the bankruptcy completed as soon as possible.
