Chapter 7 Bankruptcy: The Basics

Unemployment can be an extremely stressful time for a person. With no income, bills and other financial responsibilities keep coming in, and you have no way to pay them off effectively. Using your credit card to pay these debts can make things worse in the long run.

If you have a considerable amount of credit card or medical debt, can unemployment actually be a benefit to help you overcome the debt? There are several requirements that someone needs to meet in order to qualify for bankruptcy, and having a job is not one of them. But how does not having a job help qualify for unemployment?

The benefit of unemployment

Bankruptcy can discharge debt like credit card debt, medical debt, and personal loans, but only if an applicant qualifies for the benefit. Among the factors necessary to qualify, your income to debt ratio is a factor. If your debt is less than half of what you earn in a year, you may not qualify for bankruptcy.

If you are unemployed, you likely have little to no income, which can considerably improve your chances of earning unemployment. Even if you are just in between jobs, putting a small number as your income for a bankruptcy applicant can be a significant advantage in discharging your unsecured debt.

Other factors in qualifying include having minimal disposable income, as well as having an income that is below the median amount of income for your state. With nearly zero income or less, an employed applicant may have difficulties in meeting these thresholds in their bankruptcy application.

See if you can qualify

If you are considering whether or not you may qualify for Chapter 7 Bankruptcy, consult with an experienced bankruptcy attorney. Their guidance can give you the assistance you need to overcome your financial hardship and beat your debt.


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