What Bankruptcy should I file if I have little or no income?

If you have no income, bankruptcy is designed to help you. Chances are, if you are in this situation then you are judgment proof. This is the legal term for the old adage “you can't get blood from a stone.” If there is nothing to collect from a debtor, then the creditors are out of luck regardless of any litigation they may try to pursue.

That being said, debtors with little or no income are most likely eligible for a Chapter 7 bankruptcy. Chapter 7 bankruptcy requires a means test and those whose incomes are too high will have to file a Chapter 13. Under a Chapter 7, the debtor with little to no income will have to get rid of as many of his/her assets as allowed under the law to repay creditors. Chapter 7 will also allow the debtor to get rid of unsecured debts that the debtor has no feasible way of repaying under the bankruptcy.

Filing for bankruptcy is not free, however. You will need to save money to hire an experienced bankruptcy attorney since bankruptcy law has changed in the past few years and low income legal clinics lack the resources to take on bankruptcy cases.

Furthermore, the bankruptcy laws are still being ironed out in the courts and judges are even confounded about interpretation of the law. If judges are confused, then the average consumer is doomed to fail without an experienced bankruptcy attorney around.