Being Unemployed and Filing Bankruptcy in Monterey Park
Unemployment In Monterey Park
As Monterey Park bankruptcy attorneys, unemployed clients frequently request debt relief options. Thankfully, many options exist for unemployed debtors. The first thing you should do is to consult with a bankruptcy attorney in Monterey Park to go over your facts and circumstances. From there, the attorney can provide you with options that are specific to your situation. These options may or may not include bankruptcy.
Types of Bankruptcy
The two most common forms of bankruptcy for unemployed debtors are Chapter 7 and Chapter 13. Of the two, Chapter 7 is faster and less complicated. On the other hand, Chapter 13 involves making a monthly plan payment to the bankruptcy trustee who distributes the money to your creditors. Although Chapter 13 does not sound feasible for unemployed debtors, there are many reasons why Chapter 13 might benefit the unemployed. Therefore, speak with your bankruptcy attorney to find out what is best for you.
Chapter 7 Bankruptcy
Unemployed debtors commonly file Chapter 7 bankruptcy. In Chapter 7, you typically receive discharge of all your debts. Chapter 7 is designed for debtors who lose their jobs, or have low income. People refer to Chapter 7 as liquidation because the bankruptcy trustee can potentially sell your property to pay your creditors. However, necessary property is exempt from liquidation. In most cases, your property is protected, leaving nothing for the creditors to come after. On the other hand, if you unprotected own valuable assets, then the bankruptcy trustee can sell your property to pay creditors. In cases like this, Chapter 13 might be a better option. Schedule a consultation to speak with a bankruptcy attorney for specifics.
To file Chapter 7, you must pass the “means test” in most cases. The means test compares your income to the average or median income. If you are below the median, then you qualify for Chapter 7. As such, unemployment actually benefits you in Chapter 7. On the other hand, if you are above the median income then you might have to file Chapter 13.
Chapter 13 Bankruptcy
The other common form of Bankruptcy is Chapter 13. Your Monterey Park bankruptcy attorney can help you file a Chapter 13 bankruptcy if you do not qualify for Chapter 7. In Chapter 13, you and your attorney will propose a three to five-year monthly payment plan. As such, unemployment might make any payment plan unfeasible. However, there may be a specific reason that unemployed debtors need to file Chapter 13.
Additionally, many people have additional sources of income such as rental income, unemployment benefits, or Social Security. You and your Monterey Park bankruptcy attorney must demonstrate the ability to make regular monthly payments to the bankruptcy trustee. If you can successfully do this, there is no reason why your unemployment will interfere with your Chapter 13 bankruptcy.
NOTE: This is for informational purposes only and does not constitute legal advice.