Wage reductions and job loss are some of the common reasons why people file bankruptcy petitions. It isn’t necessary to be employed in order to file. Bankruptcy filers who are unemployed usually file for Chapter 7 bankruptcy. If approved, this would eliminate all of your dischargeable debts, leaving you with a clean slate to get your life back on track. Chapter 7 requires filers to have an average income below a certain threshold.
In contrast, Chapter 13 bankruptcy is often called “wage earner’s bankruptcy” because people who file for Chapter 13 earn too much money to qualify for Chapter 7. It’s unlikely that, as an unemployed filer, you would file for Chapter 13 bankruptcy—unless you have significant income from rental properties or unemployment benefits.
You’ll have the answers to all of your questions about bankruptcy when you become a client of Cutler & Associates, Ltd.