One of the biggest triggers for a bankruptcy filing is losing your job. This makes sense because most people who abruptly lose their job are not equipped to keep up with their financial commitments. However, this doesn’t mean that every option will be available to the recently unemployed, or that filing for bankruptcy immediately or shortly after losing your job is the best approach.
Qualifying for Chapter 7 Bankruptcy While Unemployed
The first step in determining whether you are eligible for Chapter 7 income eligibility is to compare your income to the median income of a household of the same size in your state. If you are not working, it is likely that your income will fall below that line. In California, the median income for a single person is slightly over $5,000/month. However, this number is not definite. For instance, if you are married to a high earner your household income may be above the median even without your income, or your unemployment compensation combined with your spouse’s income may cross the line.
Although income more than the median income may not necessarily preclude you from filing Chapter 7 bankruptcy, it could require additional analysis to determine eligibility.
Establishing Eligibility for Chapter 7
Determining eligibility may also be slightly more complicated if you have left a high-paying job, since the standard analysis involves looking at income from the past six months. Although you will have the opportunity to explain the change in circumstances and the fact that your past income no longer fairly represents your future projections, you may be advised that a presumption of abuse has arisen and you have to provide additional information to overcome this presumption.
Should I File Bankruptcy While Unemployed?
This is not a simple question to answer because every situation is different. If you have lost your job and are considering filing bankruptcy and other debt relief options, the best step is to consult with an experienced Central Valley bankruptcy attorney.
Call an Experienced Central Valley Bankruptcy Attorney
If you have been impacted by the COVID-19 pandemic and are planning to file or in the midst of a bankruptcy proceeding, 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.