{"id":286965,"date":"2021-01-12T08:27:58","date_gmt":"2021-01-12T13:27:58","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/bankruptcy\/what-is-bankruptcy\/can-you-file-for-bankruptcy-while-unemployed.html"},"modified":"2026-08-04T11:44:24","modified_gmt":"2026-08-04T16:44:24","slug":"can-you-file-for-bankruptcy-while-unemployed","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/what-is-bankruptcy\/can-you-file-for-bankruptcy-while-unemployed.html","title":{"rendered":"Can You File for Bankruptcy While Unemployed?"},"content":{"rendered":"\n
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Can You File for Bankruptcy While Unemployed?<\/h1>\n\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

You can file for bankruptcy while unemployed, and having little to no income often makes it easier to qualify for debt relief<\/span> under Chapter 7. Being out of work helps you pass the mandatory means test<\/span>, allowing the court to discharge unsecured debts<\/span> like credit cards<\/span> and medical bills<\/span>. Securing approval for a Chapter 13 repayment plan<\/span> without regular income is extremely difficult unless a working spouse files jointly.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

Qualifying for bankruptcy has nothing to do with your job status. Many Americans live paycheck to paycheck, and going a couple of weeks or months without a job can cause severe financial distress for some families.<\/p>\n

You can file for bankruptcy if you’re unemployed. Having little to no income would only increase your chances of qualifying for a Chapter 7 bankruptcy<\/span><\/a>. When it comes to Chapter 13 bankruptcy<\/span><\/a>, a bankruptcy court<\/span> will rarely approve a repayment plan<\/span> without regular income.<\/p>\n

This article explains what\u2019s involved in filing for bankruptcy while unemployed. It also examines how being out of work can affect your bankruptcy case<\/span> and if your unemployment benefits<\/span> come into play.<\/p>\n

If you\u2019re out of work and are considering filing for bankruptcy, consider contacting a local bankruptcy attorney<\/span><\/a> before filing anything with the court. While the bankruptcy process<\/span> can be straightforward for some debtors, these cases can become complex rather quickly. An experienced bankruptcy lawyer<\/span><\/a> will make sure you file your petition correctly and will work hard to help you decide how best to proceed.<\/p>\n

What Type of Bankruptcy<\/span> Should You File if You\u2019re Unemployed?<\/h2>\n

There are two main types of personal bankruptcies: Chapter 7 and Chapter 13. Chapter 7 is ideal for people looking to eliminate their debt and get a fresh start<\/span>. Chapter 13 is designed for people who want to keep their assets and restructure their debt.<\/p>\n

If you aren\u2019t working, the odds of qualifying for a Chapter 13 bankruptcy<\/span> are slim. To file Chapter 13 bankruptcy<\/span>, you must prove that you have sufficient regular income to make monthly payments<\/span> under your plan. That\u2019s difficult without steady income, unless you\u2019re filing a joint petition with your employed spouse.<\/p>\n

For Chapter 7 bankruptcy<\/span>, being unemployed may make it easier to qualify. One of the requirements of filing a Chapter 7 <\/span>bankruptcy<\/span> case<\/span> is that you earn less than your state\u2019s median household income<\/span>. You\u2019ll qualify by default if you have no income, assuming that you aren\u2019t filing bankruptcy with a spouse who is earning a significant amount of money.<\/p>\n

Filing for Chapter 7 Bankruptcy<\/span> While Unemployed<\/h3>\n

You\u2019re likely to qualify for Chapter 7 bankruptcy<\/span> if you\u2019re unemployed. With no other incoming money beyond unemployment benefits<\/span>, your monthly income<\/span> will fall below your state\u2019s median household income<\/span>.<\/p>\n

If you’ve been out of work for five or six months, your income may appear to be zero. This depends on whether you received unemployment compensation<\/span> during the six-month “current monthly income<\/span>” lookback period. Unemployment benefits<\/span> are often included in current monthly income<\/span> under the Bankruptcy Code. If you\u2019re uncertain about this, check with a bankruptcy lawyer<\/span><\/a> before you make plans to file.<\/p>\n

Even if your state includes your unemployment benefits<\/span> as income for purposes of the Chapter 7 \u201cmeans test<\/span><\/a>,\u201d there\u2019s a good chance that you\u2019ll still qualify for Chapter 7. The means test<\/span> is based on your state\u2019s median income<\/span> level.<\/p>\n

Even if you fail the means test<\/span>, you may still qualify for Chapter 7 bankruptcy<\/span>. A bankruptcy trustee<\/span> examines your disposable income<\/span> and measures it using IRS standardized expense allowances to determine if a presumption of abuse arises. If there is no abuse, then you will likely qualify for bankruptcy. The bankruptcy court<\/span> calculates your disposable income<\/span> by taking your current monthly income<\/span> over the previous six months preceding the filing date and subtracting all allowable expenses<\/span>.<\/p>\n

Qualifying for Chapter 13 Bankruptcy<\/span> While Unemployed<\/h3>\n

Unlike Chapter 7, a Chapter 13 bankruptcy<\/span> requires that you earn enough money to make monthly payments<\/span> for the duration of your Chapter 13 plan<\/span>. If you\u2019re unemployed, the court may determine that you don\u2019t have sufficient regular income to commit to a reasonable payment plan<\/span>. The U.S. Bankruptcy Code defines regular income as a reliable, recurring source of income<\/span>, which the court often doesn\u2019t consider unemployment benefits<\/span> to be.<\/p>\n

For this reason alone, you probably won\u2019t qualify for Chapter 13 bankruptcy<\/span>. Even if you can prove that you have sufficient regular income to make your monthly payments<\/span>, you must still meet the other eligibility<\/span> requirement for a Chapter 13 bankruptcy<\/span>. According to federal bankruptcy laws<\/span>, your total secured and unsecured debt<\/span> must fall below a specific amount to qualify for a reorganization bankruptcy.<\/p>\n

The maximum limits for your outstanding debt as of 2026 are as follows:<\/p>\n