Your potential for qualifying for a certain type of bankruptcy is somewhat dependent on your income. Your capacity to cover the expenses you accrued while you believed your work was secure may be severely impacted by losing your job. One of the reasons people find themselves compelled to file for bankruptcy is a loss of income combined with a significant amount of debt.
But, if you do not have a reliable source of income, it is highly challenging to apply for or continue with Chapter 13 bankruptcy. If you’ve recently lost your employment, it is simpler to satisfy the “means test” and declare bankruptcy under Chapter 7. Whatever your circumstance, a skilled bankruptcy lawyer at the Harris Firm, LLC can give you wise counsel on how to proceed.
Chapter 7 bankruptcy:
Most “means tested” creditors do not fall into this condition. They typically have a few low-value or sparsely distributed high-value assets that are protected by exemptions, allowing them to maintain their property even after filing for Chapter 7 bankruptcy. In those kinds of bankruptcy, creditors will not be compensated.
You can have substantial assets and property that are not covered by Alabama exemptions liquidated and sold to settle debts. Unemployment insurance and other public benefits are not provided in Alabama. They cannot be sold off to pay off your debts.
Chapter 13 bankruptcy:
Having an income is crucial since you must be capable of making a payment each month. Unemployment may make things difficult. You must demonstrate to the court that you can afford the recommended monthly payment when you file your Chapter 13 paperwork. Your lawsuit will be dismissed if you are unable to provide that evidence.
In Chapter 13, you can use several strategies to keep your assets and property intact in exchange for having to repay a portion or all of your outstanding debt through a debt repayment plan.
Losing a job can be traumatic. If you’ve been building up debt under the belief that you can pay it off, losing your job can feel like the ground has been torn out from under you. In such cases filing for bankruptcy might be the best option for you. Get in touch with a bankruptcy lawyer in Montgomery to receive help in the legal proceeding. Moreover, the lawyer will go over everything to understand the potential of your case.