It is never a good time to file bankruptcy. However, what if you are unemployed and considering bankruptcy in California? Although anyone may file bankruptcy, it does not mean that the filing will be successful, regardless of your employment status.
Being unemployed means your funds are limited and filing bankruptcy may seem like the right move to make. However, if you are receiving unemployment compensation, it may prevent your application from being approved for bankruptcy. The reason is that some courts may consider unemployment benefits as income, instead of being excluded as social security income. As such, it is best to first consult with an experienced Central Valley bankruptcy attorney to determine your best course of action.
At issue is whether the court that accepts your bankruptcy filing believes that Federal mandates enacted by Congress should take the greater authority in these cases, or if they are willing to consider legislative intent and apply a case by case ruling. In either case, if you are unemployed, it is to your advantage to consult with an attorney first to discuss your options in California.
Filing Chapter 7 Bankruptcy While Unemployed
When you file Chapter 7 bankruptcy, unlike Chapter 13, you are allowed to keep some of your property that is deemed “exempt.” Additionally, you don’t have to file a repayment plan, but any nonexempt assets that the debtor holds will be sold off or liquidated to repay creditor claims. Unemployment can be an advantage for Chapter 7 bankruptcy. California laws do not state that you must have a job or income in order to file for a Chapter 7 bankruptcy.
Your unemployment compensation benefits count as a portion of your income, along with any income incurred within the past six months prior to filing a bankruptcy claim. However, the court will also apply a means test that is used to determine if your income is within the limits for a Chapter 7 filing, and also to gauge your ability to repay debtors. Although in some cases the unemployment income may disqualify the debtor for a Chapter 7 bankruptcy, it is not always the case. That’s why it is always best practice to consult with an experienced Central Valley bankruptcy attorney to help you determine the best way to proceed when filing for bankruptcy in California.
Call an Experienced Central Valley Bankruptcy Attorney
If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.
For more information or to schedule a complimentary consultation with Central Valley bankruptcy attorney Gurjit Srai, please call 209-323-5558, or complete our online form.