If you’re struggling with debt and are unemployed, you might wonder if you can file for Chapter 13 bankruptcy to get some relief. The answer is more complex than a simple yes or no, as various factors come into play. In this article, we’ll discuss the basics of Chapter 13 bankruptcy, its eligibility requirements, the challenges of filing while unemployed, alternative options, and tips for improving your chances of successfully filing.
Chapter 13 bankruptcy, also known as a wage earner’s plan, allows individuals with regular income to develop a plan to repay all or part of their debts. It typically involves a repayment plan that lasts three to five years, during which the debtor makes monthly payments to a trustee who then distributes the funds to creditors.
Some advantages of filing for Chapter 13 bankruptcy include stopping foreclosure on a home, catching up on missed mortgage or car loan payments, and protection from creditors during the repayment period.
To be eligible for Chapter 13 bankruptcy, you must have a regular income source. Although the bankruptcy code does not define regular income, it can include wages, self-employment income, Social Security benefits, income from a non-filing spouse, and family support. The income should be sufficient to cover your monthly living expenses and the proposed repayment plan.
There are also debt limits for Chapter 13 bankruptcy. As of 2023, total debts at filing cannot exceed $2,750,000, irrespective of the type of debt. These amounts are subject to change, so verifying the current limits is essential when considering filing.
Your eligibility for Chapter 13 bankruptcy might be affected if you have filed for bankruptcy in the past. If you’ve had a prior Chapter 13 discharge, you must wait two years before filing again. For a previous Chapter 7 discharge, the waiting period is four years.
If you are filing for Chapter 13 bankruptcy while unemployed, it can be a challenging process. The court requires proof of regular income to approve the repayment plan. Without a steady income, you may not be able to afford the monthly payments, and the court may dismiss your case or convert it to a Chapter 7 bankruptcy.
If you’re unemployed and unable to meet the income requirements for Chapter 13 bankruptcy, consider exploring other debt-relief options. These could include:
You can try to secure a steady income to improve your chances of filing for Chapter 13 bankruptcy while unemployed. This might involve finding a new job, working part-time, or starting a side gig. You could also ask for financial help from family or friends. Most bankruptcy trustees will require you to provide an affidavit of support as evidence of financial assistance from friends or family members.
Cutting expenses can help you allocate more funds toward your debt repayment plan. Please look over your budget and make sure there are no unnecessary expenses. This might include eating out less, canceling subscriptions, or downsizing your living space.
A bankruptcy attorney can guide you through the process and help you determine if Chapter 13 bankruptcy is the right option. They can also help you develop a feasible repayment plan considering your financial situation.
While it can be challenging to file for Chapter 13 bankruptcy while unemployed, it’s not impossible. By securing a steady income, reducing expenses, and consulting a bankruptcy attorney, you can meet the eligibility requirements and find relief from your debts. Always explore alternative options and seek professional advice before deciding on your financial future.
Robert Stiberman is a bankruptcy attorney with extensive experience in Chapter 13 bankruptcy cases. He has represented numerous clients in bankruptcy cases and is well-versed in the requirements of the Chapter 13 trustees. With his knowledge and experience, Robert Stiberman can provide his clients with the guidance and representation they need to navigate bankruptcy successfully.
Speaking to our law firm is always 100% confidential. We do our best to respond to inquiries in under 24 hours.
We’ll get in touch as soon as possible.