One of the most common reasons for someone filing for bankruptcy is the loss of a job. So, you can definitely file for bankruptcy if you don't have a job but whether or not the bankruptcy will be successful will depend on which type of bankruptcy you file for.
Chapter 7 Bankruptcy
When you file for chapter 7 bankruptcy while you are unemployed, it makes everything easier. Chapter 7 is designed to completely wipe put things like credit card debt or debt from medical bills. These are called unsecured debts and Chapter 7 completely discharges them. If you don't have any non-exempt property that can be sold to repay your debt then your creditors do not get anything.
Since Chapter 7 completely wipes out your debts, it is what most people want to file for. To prevent people from abusing this type of bankruptcy, you have to pass a means test to qualify. The means test will determine whether your household income is above or below your state's median income for other households of your size.
If your income falls below the median income then you are automatically eligible for Chapter 7 bankruptcy. If you are unemployed then you probably have little to no income so you should be able to easily qualify for Chapter 7.
Chapter 13 Bankruptcy
If you file for Chapter 13 bankruptcy then you will be paying back most of your debts through a three to five year repayment plan. It is a good way to:
- Catch up on mortgage payments
- Get rid of a second mortgage
- Cram down car loans
- Pay back non dischargeable debts
It can be difficult to handle the monthly payments required for a Chapter 13 bankruptcy if you are unemployed but you can still qualify for one. If you have questions about which type you should file for in your situation, contact one of our bankruptcy attorneys for a free consultation.