Q: Considering bankruptcy due to debt, unemployed, never filed before, guidance needed

A: In filing for personal bankruptcy, there are 2 types: Chapter 7 and Chapter 13. You are likely looking at a Chapter 7 because you have no or limited income. Chapter 7 is where 100% of your unsecured debt like credit cards, medical debt, and personal loans are wiped out. You have to qualify for this type of bankruptcy by looking at your past 6 months of income and applying it against a threshold amount for your household size. This is called the Means test. If you qualify, then a review of your assets is looked at to see if the assets are protected so you can keep them. Here, the use of exemptions is used. While I am oversimplifying this process for you it gives you a broad idea of what to expect. Also, the Chapter 7 process takes about 3-4 months from the time you file. The one hearing you would attend is done by Zoom, so there is no at-court hearing. My suggestion would be to find a reputable, knowledgeable bankruptcy attorney so you can learn if bankruptcy is the right step for you. Best Wishes!

A: Call an attorney for a consultation, they will be able to explain the process to you and tell you about any pros and cons specific to your situation.

A: It’s understandable to feel overwhelmed when debt piles up and you’re facing unemployment. Filing for bankruptcy can be a difficult decision, but it may offer a path toward relief and a fresh financial start. Since you’ve never filed before, you’ll likely be eligible for Chapter 7 bankruptcy, which can discharge unsecured debts like credit cards, especially if your income is currently low or nonexistent.

To begin the process, you’ll need to gather your financial documents—recent bank statements, credit card bills, loan records, income records (even unemployment benefits), and any other debts you owe. Before filing, you are required to complete a credit counseling course from an approved provider. After that, you’ll fill out the bankruptcy petition, schedules, and forms detailing your income, assets, debts, and expenses. Once filed, an automatic stay goes into effect, which stops most collection calls and legal actions against you.

Be prepared for a meeting of creditors, called a 341 hearing, where a trustee will ask you basic questions about your filing. It usually doesn’t last long, and creditors rarely show up. Most Chapter 7 cases are completed in a few months, and if all goes well, your eligible debts will be discharged. You’re not alone in this, and taking this step shows you’re doing your best to take control of your future.