Some people believe that having a job means you can’t file for bankruptcy. That belief is false. If you earn a paycheck and struggle with debt, you may still qualify. Employment can affect which type of bankruptcy fits your situation, but it does not block you from filing.
Employed people can still file for bankruptcy
Your income helps determine which chapter applies. Chapters 7 and 13 are the two main types of consumer bankruptcy, and each one has different rules.
Federal law uses the means test to decide if you qualify for Chapter 7. The means test looks at your income and compares it to Louisiana’s median. If your earnings are lower than that benchmark, you may meet the requirements for Chapter 7. Deductions may help with higher incomes.
Your income guides your bankruptcy options
Your income helps determine how your case moves forward. Here’s how:
- You may qualify for Chapter 7 if your income falls below the state median
- You may use Chapter 13 if you earn steady income
- You may have your income, expenses and household size reviewed by the court
- You may keep your home, car or other essentials depending on exemptions
- You may repay part of your debt over time through a structured plan
Employment can give you more flexibility and control over how you manage debt through the bankruptcy process.
State rules may provide protections
Louisiana follows federal bankruptcy law but applies its own exemption rules. These rules decide what property you may keep. For example, the state’s homestead exemption may protect part of your home’s value. If you qualify for Chapter 13, you may be able to catch up on missed payments and avoid foreclosure. Your income helps shape your repayment plan, including how much you pay and how long it lasts.
Bankruptcy is complicated; don’t tackle it unprepared
Bankruptcy is a legal process, and you shouldn’t try to figure it out alone. If you work and feel overwhelmed by debt, professional legal support may be able to help you understand your options and make informed decisions.