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.
Filing Chapter 7 Bankruptcy
Chapter 7 bankruptcy has the benefit of allowing you to keep some of your property, that is determined to be “exempt”. Also, unlike a chapter 13 bankruptcy, no repayment plan has to be filed, but any nonexempt assets that the debtor holds will be sold off – or liquidated in order to repay any claims from creditors. For a chapter 7 bankruptcy, unemployment can be an advantage. The laws in California do not state that you must have a job or income in order to file for a chapter 7 bankruptcy.
If you are receiving unemployment compensation, these funds will count as a portion of your income, along with any income incurred within the past six months prior to filing a bankruptcy claim. But, also consider that the courts will apply a means test, which is used to determine if your income is within the limits for a chapter 7 filing, and also to gauge your ability to repay debtors . Sometimes, the additional unemployment income may disqualify the debtor for a chapter 7 case. That’s why it is always best practice to obtain an experienced bankruptcy attorney in LA to help you determine the best way to proceed when filing for bankruptcy in California.
Chapter 13 Bankruptcy Considerations
While you don’t technically need a job to file a chapter 13 bankruptcy in California, unemployment can prevent a successful outcome. Chapter 13 allows the debtor have a three to five year repayment plan that is more beneficial for the debtor. Unlike chapter 7, this will give the debtor the option of keeping their home and other assets while paying back a reduced portion of debt.
For some individuals, Chapter 13 may not be the best route because your limited unemployment income, any rental income, and social security benefits will all be used to make the monthly payments to the bankruptcy trustee. With that said, before the courts will grant a chapter 13 filing, you must demonstrate that you will have enough income to afford your repayment plan before your case is approved.
If you are unemployed and are considering filing for bankruptcy in California, contact Oaktree Law for a free evaluation of your case and counseling on the best debt relief options for your individual case. Our skilled attorneys are nationally recognized and will stand by you to see your case to a successful end.