A job loss can wreak havoc on your personal finances, especially if you’ve recently dealt with unexpected expenses or you have not built up an adequate cushion to protect you in case you go several months or more without income. Losing a job is one of the most common reasons why people end up filing for bankruptcy protection.
In Georgia, you can file for bankruptcy if you are unemployed. However, if you made a considerable amount of money at the job you’ve recently lost, it could have an effect on your bankruptcy case — even though you’re no longer seeing that income.
Here’s how your unemployment status could affect a Chapter 7 or Chapter 13 bankruptcy
The biggest hurdle you face to filing for Chapter 7 bankruptcy when unemployed is the means test. Passing the means test can be challenging if you had a high-paying job that you lost only recently. This is because the means test involves reporting any income received during the previous six months. If the figure is high enough, you will fail the means test, even if all the income comes early on in that six-month period.
You can choose to wait a few months and remain unemployed to drop your six-month earnings average. But this might not always be the smartest financial decision, and even then you will still be required to report unemployment income.
You may file for Chapter 13 bankruptcy if you are unemployed. But if you do not have any employment income, you’ll need to demonstrate you have some other form of income from a verifiable source that will allow you to afford the payments you schedule in your repayment plan. This could include unemployment benefits, Social Security Disability benefits or retirement benefits. You’ll need to show the court you will be able to live up to your obligations in your repayment plan.
For more information about filing for bankruptcy in Georgia while you are unemployed, consult an experienced bankruptcy attorney with Jeff Field & Associates. Give us a call at 404-381-1278 or contact us online to schedule a free initial consultation.
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