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Unemployment and Bankruptcy Questions

Unemployed is one of the most common reasons people are in personal bankruptcy or facing other types of bankruptcy. When individuals are unemployed, their credit card bills, living expenses and mortgage payments can be hard to maintain. Bankruptcy law allows federal protection that allows an individual who is having a hard time making their financial obligations to get relief from all or some of their debts. Read below where the Experts have answered the top questions about unemployment and bankruptcy.

In Louisiana, is unemployment considered an income when deciding if an individual is eligible for Chapter 7 Bankruptcy?

Many bankruptcy courts believe that unemployment is part of the Social Security benefit and as a result is not added in calculating the income. However, in some cases, the person may need to include a separate list under the Social Security Act. When reporting this separately, this will allow the individual t make the decision when auditing their financial income to leave out the unemployment.

Can someone file for bankruptcy when receiving unemployment overpay?

In many cases this can be looked at as an unsecured debt by the state. If the overpayment was because of fraud, and they are still trying to file for the unemployment benefits after receiving employment, this could be considered a criminal offense and bankruptcy will not remove this debt.

In the state of New Hampshire is an overpayment of unemployment that is being returned by the state able to be removed when filing for Chapter 7 Bankruptcy?

In certain specific cases, overpayments of unemployment can be removed in a chapter 7 bankruptcy case. However, there are still some cases, where there is fraud involved, that the creditor may deny removal from the debt.

In the state of Washington, because of unemployment I had to file for a Chapter 7 Bankruptcy. A private loan stated that student loan was not included whereas the credit agencies stated that the student loan was included in the filing, what does included mean?

The term “included” does in fact mean that this debt was listed in the Bankruptcy request. In many cases, not all debts are allowed to be included in the bankruptcy to be removed. This can often include student loans. Student loans are one of the roughly 20 different types of debts that are normally not able to be removed in a bankruptcy filing. Nowadays, the only option to have the student loan removed would to show proof that the nonpayer is currently and permanently disabled.

Due to unemployment an individual had to file for bankruptcy. During a creditor/trustee meeting does this individual need to provide information on how their money in their checking account was spent?

In these types of meetings there is usually very little to worry about. Normally, the trustee/creditor will just want a printout of the date of the filing. The individual does not usually have to provide their bank statements for the trustee, but the trustee can request these. In general, the trustee will want to look for special payments in the 90 days before filing of bankruptcy, especially for any payments made to friends or family over the amount of $600. Also, in many cases the trustee could want a print out of the last 4 years of tax returns and the last 60 days of income that was received. As for any regular living expenses the trustee will usually require this.

When unemployed and receiving unemployment benefits, an individual may not always be able to make ends meet and this can result in their filing for bankruptcy. They may need a little extra help to get back on their feet. Proceedings related to bankruptcy and unemployment benefits can often be complex because they can vary based on individual circumstances. If you or someone you know is dealing with unemployment and bankruptcy, you can get answers to questions about your case by asking an Expert for legal insights.
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Recent Unemployment Questions

  • Is $4,000 reasonable for a Chapter 13 bankruptcy in Illinois?

    Is $4,000 reasonable for a Chapter 13 bankruptcy in Illinois?
    My situation is this. I became unemployed about two weeks ago. My tax liability is roughly $6,000. Unsecured debt is roughly $55,000. Assets are roughly $9,000 vehicle, $8,000 cash and $6,000 personal property.
    One attorney I spoke to charges a flat fee of $4,000. He said paying it up front is a bit unusual, but in my case that $4,000 paid up front diminishes my assets by roughly $8,000.
    My hesitancy is that if I pay him $4,000, I essentially have $4,000 left to live on until my unemployment kicks in, which may be several weeks. Most of that $8,000 cash is from severance pay ... which delays the unemployment payments.
    The attorney suggests Chapter 13 over Chapter 7 for me, as he says the exemptions in Illinois are not sufficient to keep me from losing almost all of what I do currently have.
  • I became unemployed in early June. I have no unsecured debt

    I became unemployed in early June. I have no unsecured debt and about $55,000 in unsecured debt. I also have a tax liability of approximately $6,000 payable in April 2015 or earlier. My current assets are roughly a vehicle that books at about $9,000, $8,000 in a checking account and $6,000 in personal property. I am up to date with rent.
    I have not retained an attorney or finacal adviser, but the one I have met with suggested Chapter 13. Regarding Chapter 7, he said exemptions allowable in Illinois were not sufficient for my situation and Chapter 7 could leave me with nothing.
    He suggests a Chapter 13 that would leave me with a monthly payment of about $265. He also suggests paying for my bankruptcy attorney fee up front, as that payment will draw down my assets and essentially levy $2 for every $1 paid.
    Does this Chapter 13 idea sound reasonable? What worries me is that right now, I have no prospects of regular income other than unemployment.
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    I have a civil court order granting payment of credit card debt to capital one. Can my Ohio retirement wages be garnished.
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