Can I File Bankruptcy if I Am Unemployed?

TRI Writer • December 28, 2020

There are many different reasons for filing bankruptcy, but one of the most common is unemployment. No one is ever completely prepared to be fired or laid off (financially or emotionally). An abrupt loss of income often escalates quickly into missed car payments and missed mortgage payments. If you have been laid off or fired, and you find yourself unemployed, don’t wait for things to get out of control, talk to an experienced Tennessee and Georgia bankruptcy attorney about how filing bankruptcy can help protect your savings and your retirement.  

Is Filing Bankruptcy the Best Option? 

During times of unemployment, most people dip into their savings to cover their everyday expenses. Turning to bankruptcy as an option can be a powerful lifeline to people with growing debts. If you are considering filing bankruptcy due to unemployment, talk to an experienced Georgia or Tennessee bankruptcy attorney about obtaining a discharge of debt through Chapter 7 bankruptcy. 

Should I Pull Cash from an IRA or 401(k) to Pay Debts During Times of Unemployment? 

When you access cash from IRAs or 401(k)s during times of unemployment, the early distributions may create tax issues and damage your future financial planning. It’s almost never a good idea to take early distributions from retirement accounts to pay debt, but it is an especially bad idea if you are unemployed. Before you tap into any retirement accounts to pay off debt or cover your day to day expenses during unemployment, get in touch with Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. 

Am I Eligible to File Bankruptcy If I Don’t Have a Job? 

The first requirement to qualify to file Chapter 7 bankruptcy is the “means test.” The “test” determines eligibility to seek a discharge of debt through Chapter 7 (or determines how much you are required to pay back to creditors through a Chapter 13 bankruptcy). A period of unemployment in the six months prior to filing bankruptcy may actually be beneficial for the purpose of qualifying to file Chapter 7 bankruptcy. 

If you have questions about how unemployment affects filing bankruptcy , we can help. Find out how to get a fresh start by filing bankruptcy. Get in touch with Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney as soon as possible.

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