Bankruptcy

Filing For Chapter 7 Bankruptcy! Do I Need To Have A Job?

By Kevin Gipson, New Orleans Bankruptcy Attorney

It is not necessary to have a job to file a Chapter 7 bankruptcy.  In fact, the filing of Chapter 7  is probably one of the few instances in your life where it helps to not be employed.

When a Chapter 7  is filed, the debtor must show that they do not have enough income available to pay their creditors any money under Chapter 13.

Whether the debtor has enough money to require them to be in a Chapter 13 or a 7  is determined though a process known as the “Means Test.”

In its simplest form, the Means Test takes the debtor’s income for the six month before the filing of a bankruptcy and compares that income to the average income for a person in the debtor’s state with the same family size.  As an example, in Louisiana, where I practice, if a single debtor make $37,331.00 per year or less, he qualifies to be in a Chapter 7.

So a person without employment can file under Chapter 7.

Remember the amount of income is only a start when performing the means test calculation.  Other factors are stilled taken into account when determining which Chapter to file.

Also, if a person makes more than the median income for his State and then loses his job, it is usually best to wait until enough time has passed for the debtor to become a “below means debtor.”

The only time a consumer debtor needs a job (or income) to file for bankruptcy is if he is filing for a Chapter 13 bankruptcy.

The issue of income or lack of income is only one of many issues that are involved in the timing of a bankruptcy filing.

The type of debts you have, the status of those debts and other factors need to be considered.

If you are considering filing for bankruptcy you need to consult an experienced bankruptcy attorney.

Full post as published by Bankruptcy Law Network on July 20, 2010 (boomark / email).