Do I need to be Employed to File for Bankruptcy in New York City?
No, in fact job loss is one of the most common reasons for filing bankruptcy in New York City. You have a legal right to debt relief and to the bankruptcy process regardless of your current work situation. However, while you are not prevented from filing, your employment status will have a bearing on the success of your bankruptcy. Employment can make the bankruptcy process easier of course, but obviously not everyone facing financial hardship will have a job when they need to file bankruptcy. Many of our clients in New York City are unemployed when they come to our office for help.
If you are unemployed your best bankruptcy results will probably come by filing for Chapter 7 protection. Chapter 7 is designed to eliminate unsecured debt like medical bills, credit cards and personal loans for low income debtors with few assets. For unemployed people with few significant assets Chapter 7 allows for the elimination of all of their unsecured debt, with usually little or nothing at all going to the creditors. To qualify for Chapter 7 you must pass the bankruptcy means test that will calculate your income against New York State’s median income. If you are below the median of $47,790 for a household size of 1 then you automatically pass and can file for bankruptcy. If your income is more than the median income then you will need to show that your disposable income is too low to cover your allowable monthly expenses set forth by the bankruptcy court. In light of this, unemployment can actually help you qualify for Chapter 7 protection in many cases.
In a Chapter 13 plan you are required to repay all or a portion of your debt in a 3-5 year plan. Chapter 13 has certain benefits unavailable in Chapter 7 including the ability to catch up on mortgage arrears, eliminate second mortgages and cram down car loans. Because you must meet the court ordered monthly payment plan Chapter 13 is usually only possible for people earning a regular income. Since many unemployed debtors still receive income from unemployment, social security benefits or other forms of income not coming from a job it may be possible for a debtor to afford a Chapter 13 plan without regular employment. It will have to be demonstrated to the bankruptcy court in New York City that you can afford your plan with you other forms of income.
With either Chapter 7 or Chapter 13 bankruptcy it is important to speak to a qualified attorney in New York City if you are unemployed and need debt relief.
Our clients always keep their homes, cars and personal property when they file bankruptcy if it is in their best interests to do so, but employment status will have an effect on your individual case. If you live in New York City and need immediate relief from your debts please contact the Law offices of William Waldner online or at 212.244.2882 to arrange a free consultation. We only practice bankruptcy law and maintain a 99% Chapter 7 discharge record in New York City as of 9/31/16.
This article is intended for educational purposes only. By reading this no attorney-client privilege has been created.