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Can You File Bankruptcy On Unemployment

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How Do I Take The Chapter 7 Means Test

Can You File Bankruptcy if You are Unemployed?

The Chapter 7 Means Test is comprised of the following bankruptcy forms: 1) Chapter 7 Statement of Your Current Monthly Income 2) Statement of Exemption from Presumption of Abuse Under §707 3) Chapter 7 Means Test Calculation. Many people only need to take the first form, but we will walk you through everything to make sure its clear as it took us a long time to figure this out. First, you should know what your income is in bankruptcy terms. You have information about it above, but you may want to take the following calculator first to help.

Can I Keep My Property In Chapter 7

By and large, most Chapter 7 bankruptcy filers keep all of their property and lose nothing. An experienced Bankruptcy Attorney will be able to advise you about the exemption laws in your jurisdiction and help you determine if anything you own or have an interest in might be at risk.

Keep in mind that outside of bankruptcy you can lose property to creditors. Prior to filing bankruptcy, creditors can continue collecting several ways. For example, creditors and debt collectors may take money out of your bank account, garnish wages and even attach liens to your property. But, all payments and collections stop upon filing bankruptcy.

Chapter 13 During Georgia Unemployment

You may file for Chapter 13 bankruptcy if you are unemployed. But if you do not have any employment income, youll need to demonstrate you have some other form of income from a verifiable source that will allow you to afford the payments you schedule in your repayment plan. This could include unemployment benefits, Social Security Disability benefits or retirement benefits. Youll need to show the court you will be able to live up to your obligations in your repayment plan.

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Unemployment And Bankruptcy: What You Need To Know

Since COVID-19 has made its way into America, the Ohio Department of Job and Family Services has paid out nearly $32 million to 105,000 claimants of unemployment. In one week, the state had more than 185,000 files for unemployment. With the novel coronavirus still wreaking havoc across the nation, theres no way to know when many Americans will get back to work. This is obviously a large problem for the total economy. But what happens if you are someone who has been laid off because of COVID-19 and you were also filing for bankruptcy?

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    Read Also: How Do I Collect My Unemployment

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    Chapter 7 During Georgia Unemployment

    The biggest hurdle you face to filing for Chapter 7 bankruptcy when unemployed is the means test. Passing the means test can be challenging if you had a high-paying job that you lost only recently. This is because the means test involves reporting any income received during the previous six months. If the figure is high enough, you will fail the means test, even if all the income comes early on in that six-month period.

    You can choose to wait a few months and remain unemployed to drop your six-month earnings average. But this might not always be the smartest financial decision, and even then you will still be required to report unemployment income.

    Can You File Bankruptcy On A Unemployment Overpayment Charge Even With Penalities

    • Posted on May 10, 2012

    As long as this is not fraud, it can be discharged in any case. If you are sued for fraud, you need to respond to fight any charge, because fraud is not discharged.

    Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.

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    How Do I Calculate My Monthly Income For Chapter 7

    Average or current monthly income includes all income received during the six months before filing for bankruptcy relief. Therefore, if you file a Chapter 7 bankruptcy petition on June 10, 2020, you must include household income received from December 1, 2019, through May 31, 2020. Add all income during those six months and divide the total by six to calculate your average or current monthly income .

    All income must be included when calculating your current monthly income or average monthly income except for income received under the Social Security Act or payments received by victims of war crimes or terrorism. Use gross income when calculating average monthly income, except for income received from rents or the operation of a business, profession, or farm. For rents and business income, you use the net income reported to the IRS after deducting necessary business expenses. Examples of income used to calculate the Means Test include, but are not limited to:

    • Salary and hourly wages
    • Net income from rents or rental property
    • Net income from the operation of a business
    • Annuity payments
    • State disability insurance benefits
    • Alimony and child support payments
    • Regular contributions to household income by your dependents or spouse, even though they may not be filing for bankruptcy relief

    It Can Be Harder To Qualify For Chapter 13

    Should an Unemployed Person File for Bankruptcy

    People often file a Chapter 13 because they earn too much to qualify for a Chapter 7 because they want to keep their vehicles, they need to catch up on recent taxes or child support, or because they want to save their home from foreclosure. Since Chapter 13 involves a 3 to a 5-year repayment plan, unemployment can disqualify someone from filing a Chapter 13 because they cant afford the monthly payments.

    If you have other sources of income, such as Social Security retirement or disability benefits, unemployment benefits, workers compensation, rental or retirement income, you may have enough income to qualify for a Chapter 13. However, if you are not able to keep up with the monthly payments, your Chapter 13 case can be dismissed.

    To explore your bankruptcy options and how they apply to your employment status, contact Albaugh Law Firm today!

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    What Can Be Done About An Unemployment Overpayment

    As I said earlier, unemployment overpayments are not dischargeable in bankruptcy, and unlike most debts, they are not forgiven if you file a bankruptcy. This is true in both Chapter 7 bankruptcy, and Chapter 13 bankruptcy.

    Every so often, however, the Minnesota Department of Employment and Economic Development will decide not to pursue the matter in bankruptcy court, and allow it to be discharged.

    This is uncommon, and becoming even more uncommon, so you should not count on it if you file for bankruptcy.

    Bankruptcy And Unemployment Benefits

    While unemployment benefits do count as income, it is unlikely that your unemployment checks are high enough to disqualify you from filing bankruptcy. If you choose to file Chapter 7 or Chapter 13, your unemployment benefits cannot be taken away in the bankruptcy process.

    One factor that does need to be considered if you are getting unemployment benefits is when they will run out. We will act quickly to make certain you get the positive impact of filing bankruptcy as soon as possible.

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    Unemployed People Filing For Bankruptcy

    Job loss is a common reason to file for bankruptcy. You do not need to be employed to file for Chapter 7 bankruptcy, although you do need to pass the means test. On the other hand, being unemployed or losing income can present a problem if you want to file for Chapter 13 bankruptcy, or if you have already filed for Chapter 13 bankruptcy, and you are in the midst of executing your debt repayment plan.

    Things To Consider When Filing Bankruptcy While Unemployed

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    While there is no bar to filing Chapter 7 while unemployed you should be thoughtful about your timing. Specifically, consider how long have you been unemployed and how much longer do you think it will last? If it is very recent and you were making good money before you might not immediately qualify for a Chapter 7 bankruptcy based on your prior income level. If you canât reasonably predict how long you will be unemployed you might consider several things – is there another job on the horizon? Do you work in an industry where there is a great need and you can usually find a new job pretty quickly? Or was the loss of your job due to an injury or illness that will require some time to heal? If so, are you still facing more medical bills? A bankruptcy will only assist with existing debt, so if you are facing some large expenses you may want to wait to file.

    Also keep in mind when you file bankruptcy with no money that your CMI is based on your average income over the last six months. This means that you may need to wait a little while to have your CMI average qualify you r a Chapter 7 bankruptcy. Even though the difference between your prior income and unemployment will feel very drastic immediately, it may not appear that way when averaged over the previous six months. Waiting an additional month or two to file will help your current monthly income to better reflect your current circumstances.

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    How Does Bankruptcy Work

    First, it helps to know how bankruptcy works. There are several chapters in the bankruptcy codes, including ones for businesses and individuals.

    The chapter that is right for your situation will depend on several factors, including:

    • Your income
    • The number of people you claim as dependents on your tax returns
    • The number and value of any assets you own

    What About Pandemic Unemployment Assistance

    The same general rules apply to the overpayment of any of the unemployment benefits you received from the state and/or federal government as part of a COVID-19 relief package.

    Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled…read more about Attorney Andrea Wimmer

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    Filing For Chapter 7 Bankruptcy And Unemployment

    One of the first questions to determine whether your unemployment benefits will be included as income for bankruptcy purposes is what type of bankruptcy do you want to file?

    If you choose Chapter 7, the fact that you are unemployed may actually be a plus. Chapter 7 allows you to wipe out, or liquidate, most of your debt, except for debt that may not be dischargeable such as child support, alimony, student loans and taxes.

    Your ability to file for Chapter 7 is based upon a means test. This test measures your income at the time of filing for bankruptcy and compares it to the median income in your state for a similar household the same size as yours.

    Can You File Bankruptcy If You Are Unemployed In California

    Can You File For Bankruptcy If You’re Unemployed?

    If you are unemployed and are considering filing for bankruptcy in California, there are considerations that can determine if your bankruptcy filing is successful, or not. Being unemployed means your funds are limited, and filing bankruptcy seems like a sound financial move. But, because some courts may consider unemployment compensation as income, instead of being excluded as social security income it is best to obtain the services of an experienced bankruptcy attorney in LA, 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 a lawyer to discuss your options in the state of California.

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    Filing A Chapter 7 When Youre Unemployed

    Not everyone can file Chapter 7 bankruptcy. If someone earns too much money, they may not qualify for Chapter 7 therefore, unemployment can definitely help you qualify for bankruptcy under this Chapter. To qualify for Chapter 7 bankruptcy, your disposable income would have to be low enough to pass the bankruptcy means test.

    The bankruptcy means test compares a debtors income in the past six months to the average income for a household of their size in the state. So, when youre unemployed, it can be much easier to pass the means test than if you had a well-paying job.

    Minnesota Unemployment Overpayment And Bankruptcy

    Sometimes people receive more money from unemployment than they are supposed to get. This can happen in any number of ways, many of which are perfectly innocent.

    For example:

    • You could fill out the unemployment forms wrong, saying that you had more income at your previous job than you thought.
    • You could lose your job, apply for unemployment, and start receiving it, but then your previous employer appeals and wins

    Unemployment will start paying out the benefits even if the employer appeals the benefits, and will keep paying the benefits until the appeal is resolved.

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    If I Dont Have A Job Can I Still File

    The short answer to this question is yes, you can. There is no law or regulation prohibiting unemployed people from filing, and in fact, losing a job can often be the catalyst which prompts the decision to file. Moreover, there is no minimum amount of debt necessary to file, nor is there an age limit . Believe it or not, you dont even have to be a citizen of the United States. With some exceptions, just about anyone who wishes to file may do so perfectly legally.

    That being said, unemployment can have an effect on how your case proceeds, so you need to assess your financial goals and work prospects before you get started.

    Bankruptcy Filing: When To Wait After Losing A Job

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    You may feel panicked after losing a job and watching debts increase. Filing for bankruptcy often needs the right timing to qualify, and an experienced bankruptcy attorney can tell you the best time to file for your situation.

    You should consider these questions before you file or speak to an attorney:

    • When did I lose my job?
    • How long do I predict I will be unemployed?
    • Was I making good money that will last me for a few months?
    • What am I getting through unemployment compensation and unemployment insurance?
    • Does a new job look promising?
    • Is my job industry in demand?
    • Will I receive Social Security benefits soon?
    • Will I be unemployed for months or years due to injury or illness?
    • Will medical debt grow while I am unemployed?

    Typically, you need to wait to file if you just had a high-earning position because you will fail the Means Test. You might also want to wait to file if you need more medical care. A bankruptcy discharge only works on your debt when you file, so any major medical debt in the future would not be discharged. Wait until your medical procedures or care is complete, so you can see a full view of your medical debt.

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    Keeping Track Of Your Unemployment Benefits

    Itâs a good idea to keep track of all the paperwork associated with your unemployment benefits. Take screenshots of online documentation. Keep receipts for the unemployment you receive. Make sure you know how much you are entitled to receive. If you are receiving more than you are supposed to receive, you will be required to return the overpayment. So, it is smart not to spend that money.

    Itâs a good idea to put the overpayment in a separate bank account to keep yourself from spending it. If there is an error, you can contact the unemployment office. You can also ask your state-elected officials for help. It is their job to make sure their constituents receive the government benefits theyâre eligible for. You can also contact a private attorney for help.

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    Most Unemployed People Won’t Qualify For Chapter 13 Bankruptcy

    Chapter 13 benefits significant wage earners who have disposable income to repay creditors. By contrast, most unemployed peopleâeven those receiving unemployment benefitsâare often barely able to meet necessary expenses. So, simply put, unemployed individuals usually don’t have enough income for Chapter 13 to be viable. Here’s how it works.

    In Chapter 13 bankruptcy, you propose a three- to five-year repayment plan to pay back a portion of your debts. The Chapter 13 bankruptcy trustee responsible for overseeing the case collects the payments and forwards the funds to creditors.

    Here’s the tricky part. While you might not need to pay anything toward nonpriority unsecured debtsâsuch as credit card bills, medical debt, and personal loansâyou could accomplish the same thing by filing for Chapter 7 and without paying into a creditor repayment plan.

    People file for Chapter 13 to take advantage of the other benefits, such as catching up on a mortgage. However, in Chapter 13, debtors must pay certain debts in fullâand it can get expensive fast.

    Not only must a debtor repay all mortgage and car arrearages if they want to keep a house or car they’ve fallen behind on, but a debtor must also pay priority debts in full, too, such as support arrears and tax debt. In most cases, an unemployed debtorâwhether receiving unemployment or notâwouldn’t have enough money to pay mortgage arrears, back car payments, and priority debts on top of their usual monthly living expenses.

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