Can I File Bankruptcy Even Though I’m Unemployed?

Can You File Bankruptcy Without a Job?

Yes. You don’t need to be employed to file Chapter 7 bankruptcy. Many people who are unemployed, retired, or stay-at-home parents file bankruptcy successfully. In fact, job loss is one of the most common reasons people fall behind on bills and consider bankruptcy.

So long as you meet the eligibility requirements, you can file Chapter  7 bankruptcy even if you’re unemployed.

Can You File Bankruptcy With No Income?

Yes. Some filers’ only income comes from unemployment benefits or government assistance. Other filers’ only income comes from retirement sources like Social Security. 

Some people report no income at all. There are income limits to file Chapter 7, but having no income doesn’t disqualify you.

If you’re considering Chapter 13 bankruptcy, it's a different story. You need regular income to make monthly payments as part of a repayment plan.

How Bankruptcy Protects You While You’re Unemployed

When you file for Chapter 7 bankruptcy, something called the automatic stay goes into effect immediately. 

✋ This is a court order that stops most debt collection efforts while your case is being reviewed. That means creditors must stop calling you, sending letters, filing lawsuits, and garnishing your wages.

This can be especially helpful if you're unemployed and actively looking for a job. Constant debt collection calls can make it stressful to answer the phone, especially if you’re waiting to hear back from potential employers. The automatic stay gives you some breathing room and space to focus on getting back on your feet.

📌 Even before filing, federal law — the Fair Debt Collection Practices Act (FDCPA) — limits when and how debt collectors can contact you. But bankruptcy strengthens those protections. If a debt collector contacts you after you’ve filed, they may be violating the court’s order and can face penalties.

Before you can file bankruptcy and get the protection of the automatic stay, you must pass the means test.

How Does Unemployment Income Impact the Means Test?

To qualify for Chapter 7 bankruptcy, most people need to pass something called the means test. This is a calculation that looks at your income over the past six months to see if you're eligible. 

👉 If your income is at or below the median income for a household your size in your state, you’ll likely qualify.

Unemployment benefits count as income on the means test. But in most cases, they aren’t high enough to push you over the income limit.

🔎 The means test looks at all income (except Social Security) from the six months before you file. This is called the look-back period. If you’ve been unemployed for more than six months, your income might be low enough to qualify easily. 

If you lost a high-paying job recently, your income during that six-month window might still be too high. If this happens, you may need to wait to file your case.

How Much Does Bankruptcy Cost? Can You Afford it if You’re Unemployed?

Even if you're not earning income, you may still be able to afford bankruptcy. The biggest costs are the court filing fee, credit counseling courses, and legal fees if you decide to hire an attorney.

There are ways to save on all these fees:

• Many Chapter 7 filers are eligible for a filing fee waiver. If you qualify, you won’t have to pay the $338 filing fee.

• There are also filing fee waivers for the two required bankruptcy courses.

• You don’t have to hire a bankruptcy attorney to file. If you have a simple case, you can use Upsolve’s free filing tool. It only takes a few minutes to see if you’re eligible.

If you don’t qualify to use Upsolve’s free filing tool or you just want some legal advice, you can also get a free consultation with a bankruptcy attorney. They can help you decide the best timing to file your case and which type of bankruptcy is best for you.

Why Timing Your Bankruptcy Filing Matters if You’re Unemployed

⏱️ If you're unemployed and thinking about filing bankruptcy, it's important to consider the timing.

Filing too early could leave you in a tough spot if you end up needing to take on more debt before your income stabilizes. That’s because you can’t file another Chapter 7 for eight years, and new debts you take on after filing aren’t included in your current case.

💳 If your unemployment benefits aren’t enough to cover basic living expenses, you may end up using credit cards or loans to get by. If you take on new debt after filing your case, it won’t be wiped out, and you could find yourself back in debt with no easy way out.

Also, be aware that lump-sum payments, like a large back-payment of unemployment benefits, can complicate your case. Once the money hits your account, it may count as cash and could be claimed by the bankruptcy trustee unless it's protected by an exemption in your state.

If you aren’t sure about the best timing for your case, you may want to speak with a professional. Upsolve can connect you with a local bankruptcy attorney for a free consultation.

It’s Hard To File Chapter 13 While Receiving Only Unemployment Benefits

Chapter 7 and Chapter 13 are the two most common types of bankruptcy for individuals. While Chapter 7 is often the simpler option for people with low or no income, there are specific reasons someone might choose Chapter 13 instead. For example, some people file Chapter 13 because they earn too much to qualify for Chapter 7. Others use it to catch up on missed mortgage or car loan payments.

But filing Chapter 13 can be challenging if you're unemployed. That's because Chapter 13 requires you to have a steady income. Under federal law, you must use your disposable income — what’s left after covering basic living expenses — to make monthly payments toward your debts through a court-approved repayment plan. These plans usually last 3–5 years.

If your only income is from unemployment benefits, you may not have enough money to support a realistic repayment plan. In that case, the court could dismiss your case or convert it to a Chapter 7. That’s why most people who are unemployed or have limited income tend to file Chapter 7 instead.

Frequently Asked Questions About Bankruptcy and Unemployment

Unemployment can be a major cause of debt and bankruptcy. It’s common to have questions about how the two relate. Here are some of the most frequently asked questions about bankruptcy and unemployment.

What if I Get a Job After Filing Chapter 7?

Getting a job after you file Chapter 7 usually doesn’t affect your case. Chapter 7 looks at your income from the six months before you file, not what happens afterward. 

If you start working and receiving income again while your Chapter 7 case is in progress, be prepared to tell your bankruptcy trustee about the change in income if they ask.

Can Bankruptcy Prevent You From Getting a Job?

In most cases, no.

Private employers have more flexibility, but most don’t run credit checks unless the job involves handling money or sensitive financial data. When applying for government jobs, federal law prevents employers from firing or refusing to hire someone because they filed bankruptcy.

For most job seekers, bankruptcy isn’t a deal-breaker, and getting a fresh start can even help you get back on track professionally.

Can You Lose Your Job if You File Chapter 7?

No, you can’t be fired just for filing Chapter 7 bankruptcy. Federal law protects employees from being let go because they filed for bankruptcy. If you work for a government agency, these protections are even stronger. 

Private employers generally can’t fire you or take negative action against you solely because of your bankruptcy filing. Though they may still run credit checks for certain positions, especially if the job involves managing money or sensitive financial data.

In most cases, filing Chapter 7 doesn’t affect your current job at all. For many people, it actually reduces stress and makes it easier to stay focused at work.

Can Bankruptcy Clear Unemployment Debt?

Sometimes. If you received an overpayment of unemployment benefits and the state is asking you to repay it, that debt may be dischargeable in bankruptcy, especially if it wasn’t caused by fraud. In Chapter 7, many people have successfully discharged unemployment overpayment debt, just like credit cards or medical bills.

That said, each case is different. If your state claims you committed fraud or misrepresented your earnings, the debt may not be eligible for discharge.