Picture this: You lost your job a few months back and are having a hard time finding a new one. Your income is nonexistent, your bills are overdue, and you’re stressed more than ever. Not a pretty picture, right?
Luckily, if you are in this predicament, you can hire a bankruptcy attorney in Bloomington. If you are unfamiliar with the laws that revolve around bankruptcy and unemployment, read on to learn more.
Can You File for Bankruptcy if You’re Unemployed?
The short answer is yes, you can file for bankruptcy if you’re unemployed in Bloomington, MN. In fact, many people do so as the less income you have, the easier it is to qualify for Chapter 7 bankruptcy.
If you are filing for Chapter 13 bankruptcy, being unemployed won’t help you as a steady income is necessary. The good news is that unemployment compensation benefits can qualify as steady income.
If you are unemployed for a short amount of time, this could be your one chance to wipe out your debt entirely before looking for a new job. Let’s take a look at the differences between these two types of bankruptcy options.
Chapter 7 Bankruptcy
As stated above, those with low income may qualify for Chapter 7 bankruptcy. This means being unemployed can actually aid you in wiping out your debt.
To qualify for Chapter 7 bankruptcy, you’ll need to pass the means test. You can hire a bankruptcy attorney in Bloomington to help you with the process.
The Means Test
The means test will help determine whether or not you qualify for debt relief. During this process, the average monthly income you received within the past six months will be compared to the median income for other households in Minnesota.
Having an income below the median helps you pass the means test. However, you may still be eligible for Chapter 7 if you are over the median income. After deducting your expenses from your income, it will be determined whether or not you have enough money to make payments to creditors. If you cannot afford a Chapter 13 repayment plan, you’ll qualify for a debt discharge under Chapter 7.
Chapter 13 Bankruptcy
If you are receiving unemployment compensation benefits, you must consider carefully whether Chapter 13 bankruptcy is the right solution. Chapter 13 typically requires that you make debt consolidation payments for at least 3 years. You should not file Chapter 13 unless it is likely that you will be able to make the payments. Low-income debtors often choose to file for Chapter 7 to wipe out the debts that qualify.
Chapter 13 bankruptcy is a little different as it has more mechanisms to help those in debt. You’ll need to have regular income to repay creditors under Chapter 13 in Bloomington.
Do You Need a Bankruptcy Attorney in Bloomington?
A bankruptcy attorney in Bloomington can help you file for bankruptcy by explaining your options and helping you fill out the required documents. When you hire a Bloomington bankruptcy attorney, you can also benefit from a redo of your credit report and credit score optimization.
That’s right! Not only are you getting out of debt, but you are also getting a clean credit report and tips on improving your credit score for the future. These tools can help you avoid more debt down the line.
Not sure how to get started with filing for bankruptcy during unemployment in Bloomington, MN? Contact us today to learn how we can help.