Unemployment Benefits Bankruptcy
If you're unemployed and worried about your finances, you've probably considered whether filing personal bankruptcy might help you with your debt woes. So how do unemployment benefits work in bankruptcy? That's a very important question to ask.
If you'd like to speak with a lawyer about your unemployment benefits, bankruptcy and how the two affect each other, please fill out the form on this page. You can arrange a free, no-obligation consultation with an attorney in your area today.
Your Unemployment Benefits in Bankruptcy
The short answer about unemployment benefits & bankruptcy is that, if you file for personal bankruptcy while receiving unemployment, your benefits should be protected, and you can typically continue to receive them after bankruptcy, if necessary.
In fact, federal bankruptcy exemptions protect a variety of benefits you might receive, including these:
- Unemployment benefits: The exemption here is for an "unlimited amount."
- Social Security and veterans benefits: Also fully exempt from creditors in bankruptcy.
- Public assistance: Again, bankruptcy exempts these benefits for as much as a person receives.
- Alimony or child support: The bankruptcy court exempts as much as a person needs to maintain a certain living standard.
- Retirement benefits: Again, the court allows a person to receive as much as she needs to live. Retirement savings accounts may also be protected.
- Other benefits: Wrongful death payments, personal injury funds, lost earnings payments, and crime victims payments are also exempted, in various amounts.
If you'd like to know more specifically which of these benefits you might continue to receive in bankruptcy (and in what amounts), you can ask a bankruptcy lawyer practicing in your area.
Unemployment Benefits, Bankruptcy and Choosing a Chapter
Here’s a look at the main two types of bankruptcy and why Chapter 7 might work better for someone currently receiving unemployment benefits.
- Chapter 13 bankruptcy: This type of personal bankruptcy grants filers a period of three to five years during which they can catch up on past-due secured debts while staying current on payments that come due in that period. One of the requirements for filing under Chapter 13 of the U.S. Bankruptcy Code is a steady income, so someone receiving unemployment benefits may not be eligible. If you can't afford to make regular payments on the repayment plan, Chapter 13 bankruptcy will not work for you.
- Chapter 7 bankruptcy: This type of personal bankruptcy grants filers a full discharge of some or all of their unsecured debts. In other words, filers are not required to repay their creditors unless they have non-exempt property that can be liquidated for a partial creditor repayment. This chapter may work better for people receiving unemployment benefits because it does not require a commitment of repayment on the part of the filer.
Ask a Lawyer about Unemployment Benefits and Bankruptcy
If you're ready to move forward with a bankruptcy filing, or if you'd like to learn more about the particulars of your situation, you can connect with a bankruptcy lawyer practicing in your area today.