By: Darrell Castle

Many unemployed people file for bankruptcy — there’s nothing wrong with it.

People turn to bankruptcy when they’re struggling with debts they just can’t pay. And many times, the debts and financial struggles come from losing their job. So, filing for bankruptcy while unemployed is a common thing. But are you filing for Chapter 7 or Chapter 13 bankruptcy? That’s important to answer.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is good for getting rid of unsecured debts like credit card and medical bills.

Those debts can really pile up fast when you fall behind and cause a lot of worry and stress. Chapter 7 allows you to discharge them relatively quickly without making payments towards them.

Since you don’t have to make payments towards the debt, this is a good bankruptcy option for you if you’re unemployed. There will be a fee you have to pay for filing your bankruptcy, but that’s all. And your attorney will discuss that with you.

You also have to qualify for Chapter 7 by passing a means test. This test compares your household income against Tennessee’s median income for a similar household. It’s designed to determine whether or not you CAN actually pay your bills rather than discharging them through bankruptcy. So, being unemployed should actually make that test easier to pass.


Chapter 13 Bankruptcy

Many people who are behind on their mortgage or car payment — secured debt — turn to Chapter 13 bankruptcy.

That’s because filing for Chapter 13 bankruptcy can stop a foreclosure or car repossession and allow you to lump those past-due payments into a repayment plan. This is a plan in which you make AFFORDABLE payments on your debt for 3-5 years.

And then once the plan is complete and you’ve made all of your payments on time, your debt is discharged, you’re current on your mortgage and your car is completely paid off.

You can also lump any of your other debts — like credit card or medical bills — in the Chapter 13 as well.

So with Chapter 13, since you’re making ongoing payments for 3-5 years, you need some kind of regular income. However, unemployment benefits can sometimes be enough income to cover it.


Why You Should File for Bankruptcy

Living a life of debt isn’t fun, no matter how you got there. The constant worry and stress about how you’re going to pay your bills, make ends meet and provide for your family can wear you down. You’re tired. You need a fresh start.

A bankruptcy can provide that fresh start. You can get rid of that debt and create a clean financial slate. All you have to do is talk to a bankruptcy attorney today.

Our Memphis bankruptcy attorneys can help
If you’re struggling financially and want to talk to someone experienced about your options, then our FREE consultation is perfect for you.

This is time reserved JUST FOR YOU. You’ll sit down with the bankruptcy attorney, go over your finances and situation. And then you’ll discuss your best options moving forward.

Maybe your best option is bankruptcy. Maybe it’s not. But wouldn’t you like to know? It’s free information!

For decades, Darrell Castle & Associates has helped people in the Mid-South get out of debt. We’re detailed, responsive and we truly care. That’s why our clients like us. That’s why we’ve received multiple Client Distinction Awards from Martindale-Hubbell for client satisfaction. You’re in good hands here.


Want a FREE bankruptcy consultation?

Call (901) 327-2100 today to schedule your appointment. Or you can fill out the form to the right of this page to have someone from our office contact YOU.


Are you worried about what bankruptcy will do to your credit score?

Filing for bankruptcy creates a great opportunity to re-establish and rebuild your credit score to the rating you want. And we have a great tool — free for our clients — that can help you. Find out about 7 Steps to a 720 here.