Can I Claim Bankruptcy Even Though I Am Working?


Can I Claim Bankruptcy Even Though I Am Working?

One of the most prevailing misconceptions when it comes to bankruptcy is that debtors must be in financial ruin before filing bankruptcy. However, the two most common personal bankruptcy types (Chapter 7 and Chapter 13) are specifically designed for people who are not earning enough to cover certain debts. So, in short, yes, you can continue to work when claiming bankruptcy. 

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is also known as a “wage earner’s plan” and for good reason. Under Chapter 13, you must be able to sustain a payment plan for 3-5 years in order to reorganize debt and regain control of your finances. Chapter 13 bankruptcy is a reorganization plan that gives the filer the freedom to pay debts in a more manageable way.

The debtor must file with the bankruptcy court a payment plan that is calculated based on debts, assets, and disposable income. Payments are made to a trustee and, in exchange, the debtor can concentrate on getting back on his feet without the stress of being pursued by creditors. There is also the potential for having debts discharged at the end of the process, so long as the debtor keeps up-to-date with his repayment plan.

If you are struggling with major debts such as vehicle or property loans, a Chapter 13 bankruptcy may provide a solution. The general idea is to better manage existing debts, while increasing the chance of retaining possession of valuable property, such as cars and homes. When a debtor pursues a Chapter 13 bankruptcy, the court will issue a stay on most collection activities.

Chapter 7 Bankruptcy

Although there is a means test involved when attempting to file Chapter 7 bankruptcy, this option may be available to debtors who are currently employed. The means test looks at your average gross income over the last six months and compares it to that of a similar household in Georgia based on data published by the IRS. However, each filer’s specific circumstances will determine whether he or she qualifies for Chapter 7 bankruptcy, so it helps to discuss your finances with a qualified debt management professional.

A Chapter 7 bankruptcy involves the liquidation of certain assets in order to pay creditors. Property is defined as either exempt or non-exempt, which means the debtor can protect items that come under the umbrella of the former while the latter is sold off to help erase the value of debt. It is important to carefully weigh up the value of items as collateral with any sentimental value before considering Chapter 7 bankruptcy as an option. If you have non-exempt assets you wish to protect and keep, Chapter 13 bankruptcy may be a better option for you, even if you may qualify for a Chapter 7.

Consult with a Bankruptcy Lawyer

If you would like to consult with an experienced bankruptcy lawyer in Georgia, you can rely on the expertise and experience of H. Lehman Franklin. With over 30 years helping clients regain financial control through debt management and bankruptcy consultation, H. Lehman Franklin is one of the most trusted bankruptcy lawyers in the state. Get in contact with the offices of H. Lehman Franklin today at 912-764-9616 or by email at if you are currently employed and would like to explore whether it would benefit you to file bankruptcy in the state of Georgia.