There is no law stating that you have to be employed in order to be eligible for bankruptcy. When you think about it, job loss is one of the primary reasons people turn to bankruptcy. Even with this in mind, your employment status can impact the outcome of your filing.
With Chapter 13 bankruptcy, you are responsible for paying back some or all of your debt through a repayment plan. During this time, you also have the ability to make up missed mortgage payments, pay back non-dischargeable debt, and eliminate a second mortgage.
Do you have Regular Income?
Despite the benefits of Chapter 13 bankruptcy, there is one major problem: you require regular income in order to meet your monthly repayment obligation. While you may be unemployed, it doesn’t necessarily mean you don’t quality. You may still have a source of income, such as social security or unemployment benefits. This money can be used to make regular payments.
Note: you must prove to the court that you receive enough monthly income to afford a repayment plan.
What if you don’t have any Income?
In this case, the court has no choice but to dismiss your Chapter 13 bankruptcy filing. The only exception is if you can prove that you can afford the repayment plan.
Note: if your situation changes during Chapter 13 bankruptcy, such as accepting a job, you are required to notify the court. If your income changes (and it probably will), your repayment plan will likely be altered.
With so many questions surrounding Chapter 13 bankruptcy, including many associated with your employment and income, it is best to consult with an attorney as soon as possible. We have helped thousands of people better understand the bankruptcy process, and to take steps to improve their financial situation.