Can I File Bankruptcy If I’m Unemployed?

October 22, 2020
Can I File Bankruptcy If I’m Unemployed?

Can I File Bankruptcy If I’m Unemployed?

The answer to that question is, “It depends.”

Chapter 7

If you are unemployed and want to file bankruptcy it might be a really good time to go ahead and file.  If you don’t have any prospects for employment at the time and otherwise qualify for a Chapter 7 bankruptcy, it would make a lot of sense to go ahead and file.

However, you’ll want to consider whether you can exempt your assets or whether you’ve made any preference payments to insiders (family/friends) within the past year, or whether you’ve transferred any assets to anyone in the past couple of years.  So, even though you might be eligible for bankruptcy now, it might make sense to wait to file bankruptcy given the circumstances that have occurred over the past couple of years.

Of course, there is also the issue of being able to come up with the money to file for bankruptcy. If you’re unemployed, you might not have the money to file bankruptcy right now, or maybe you can borrow the money from family or friends (just don’t pay them back before filing).

Chapter 13

If you are unemployed and don’t have any job prospects lined up, then it probably doesn’t make sense to file a Chapter 13 right now because in a Chapter 13 you have to propose a “feasible” plan which indicates that you’ve got the income coming in to be able to support making the proposed payments.  If you can’t show that you’ve got sufficient enough income coming in to support the payments in the plan then your plan is unlikely to be confirmed (approved) by the judge.

If you are unemployed but have an interview coming up you feel good about or can rely on family members to help you make your monthly payments then it might make sense to go ahead and file for Chapter 13.  The Chapter 13 trustee might still object to your proposed plan, but if you make your initial payments it might still be possible to get your plan confirmed.

Overall, there are many things to consider when determining the timing of filing for bankruptcy. If you’re not certain whether you should file bankruptcy right now or should wait please speak with one of our experienced attorneys. We have offices in Missouri and Kansas. Missouri: Independence, Northland KC; Kansas: Olathe and Lawrence. Please call us at 913-422-0909 to schedule your complimentary consultation with an attorney. We’re here to help.