If You Lose Your Job, Can You File for Bankruptcy?

When the pandemic struck, many Floridians lost their jobs. Close to 22 million individuals were left across the country without work, many of whom filed for unemployment benefits. For many individuals, this was not enough, and debt was racked up. With all this new debt, is it possible for those persons to file for bankruptcy?

You may be thinking at this point that the virus first entered the US two years ago. While this is true, there are new viruses that are showing up. Some individuals are not eligible for unemployment, while others have fallen behind on bills. In many cases, these individuals decided to file for bankruptcy. By doing so, many of their debts are erased, such as credit card payments or personal loans.

There are still rules that one must follow when they decide to file for bankruptcy, even with the virus in place. A person is not permitted to make several large purchases right before filing paperwork out for insolvency for up to 70 to 90 days prior.  Nor may they start selling possessions, such as a camper, car, or other items. Property may not be transferred either. You may also not file before receiving a large inheritance.

People may be able to file for bankruptcy (Chapter 7) if they are currently not working. Or they may decide Chapter 13 is best to file for bankruptcy. In this case, the person would most likely have less to pay each month. But if the person does not have any income coming in, this will not be an option for them.

Chapter 7 bankruptcy has a means test that must be passed by every individual filing. The average income per month is looked at, as is the income from six months before the day one filed. These two amounts will then be compared to your state’s median income. If you have earned less than this amount, you will be allowed to file for bankruptcy.

If you did not pass the means test, do not fret. Simply wait a month or two to see if you will then be eligible. If you simply can not wait, you can start Chapter 13 insolvency immediately. Those persons that own a house or have a car may decide they want to use Chapter 13 to repay instead of losing one or both of these possessions. You will make payments every month to your appointed trustee. The repayment amount will depend upon how much you make each month, along with any secured debts you possess. Some individuals also have qualified for Chapter 13 with their social security amounts or rental properties.

If you think you may file for bankruptcy, be certain to contact a lawyer that has your best interest at heart, such as Weller Legal Group. A free consultation is offered to determine if they will be the best fit for your insolvency case.