Even with unemployment benefits, losing your job can make it difficult, if not impossible, to keep up with your bills. As your debts pile up, it often becomes clear that catching up is out of the question. If that’s the case for you, then you’re likely considering bankruptcy.

Much like unemployment, the process of filing bankruptcy is difficult to navigate and brings up many important questions, including how unemployment benefits may affect your eligibility for bankruptcy in Georgia. If that question is on your mind, then keep reading to learn what you need to know.

Chapter 7 vs. Chapter 13 Bankruptcy Eligibility Rules

Chapter 7 bankruptcy allows you to have your eligible debts discharged in full. Chapter 13 bankruptcy, on the other hand, focuses on restructuring the debts to help you pay them back without going under. Since they work so differently, each option has its own eligibility rules — and differs on whether you’ll qualify while receiving unemployment benefits.

Chapter 7

With Chapter 7 bankruptcy, your lack of regular income often makes it easier to qualify since it helps you pass the means test. This test verifies that your income is below the state median, which is quite likely if you’re on unemployment. The test looks six months back, so if you are recently unemployed that could skew the results.

Chapter 13

Since you are working toward paying back what you owe with a better payment schedule, unemployment benefits are not usually enough to qualify for Chapter 13 bankruptcy. This option restructures your debts to let you pay them off in either three or five years. If you don’t have enough money coming in, then your case could fail to get confirmed by the courts.

You can have your Georgia bankruptcy attorney look at your unemployment benefits, assets, and job prospects to help you figure out if either option will work for you. Then, they will help you file and move through each step in the process.  

Best Times to Wait to File Bankruptcybankruptcy and unemployement

In some cases, it is best to wait a bit to improve your chances of qualifying for your preferred bankruptcy option. With that move, your situation will look different to the courts and there’ll be no doubt about your eligibility.

Newly Unemployed

If you just lost your job, your prior income counts toward the means test for Chapter 7 bankruptcy for six months afterward. That could artificially drive your household income up, making it so you’re not eligible despite the lack of actual money coming in. All you have to do is wait a few months and try again if you don’t have another high paying job by then.

About to Get a New Job

If you do get a new job while going through Chapter 7 bankruptcy, the court may find that your income is sufficient to pay off your debts. If that happens, they could decline to discharge your debts and dismiss your case. So, if you’re about to get a new job, wait to see how well your income allows you to pay your debts before filing your case.

You can figure out if you’re eligible for bankruptcy with help from an experienced attorney in Georgia. Beyond gauging your eligibility, they will help you avoid common pitfalls that could lead to the dismissal of your case or other unwanted outcomes.

Ready to File Bankruptcy While Receiving Unemployment? Let Us Help

If you’re ready to file Chapter 7 or Chapter 13 bankruptcy, our team at Clark & Washington PC is here to help. With a call to 770-488-9302, you can schedule your free consultation and get help figuring out if bankruptcy is the right choice for you. As the leading bankruptcy experts in Atlanta since 1983, we’ve handled many cases like yours and can help you navigate the process with ease. So, reach out today for a free, no obligation consultation with our team.