Can you file bankruptcy with no income?

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Question:

Can you file bankruptcy with no income?

Answer:

Filing bankruptcy without income is possible. However, your bankruptcy options are limited. For instance, chapter 13 is for individuals with regular income such as a job or unemployment compensation. Chapter 13 allows them to pay back the money they owe in 36 to 60 months.

However, the bankruptcy option you will have to choose is chapter 7. Unlike chapter 13, this bankruptcy chapter is for you because it’s for individuals with unstable or little to no income. Chapter 7 also differs from other bankruptcy chapters because it eliminates most unsecured debts such as medical bills, credit card payments and personal loans are wiped out. In other words, you aren’t legally responsible for making payments on those bills.

Before filing chapter 7, you must make sure you’re eligible for it. The U.S. Bankruptcy Courts provides you with a means test. The test is actually a formula. You must add up all your bills then subtract them from your income. Then you must subtract that total from your state’s median income for your household size. Generally, if there’s disposable income then you fail the means test and are eligible for chapter 13. However, since you have no income, you won’t have any disposable income left and thus will pass the means test.

It’s important to speak to a lawyer about filing chapter 7. The bankruptcy lawyer will explain the entire process and file your bankruptcy petition for you.

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