Is Emergency Unemployment Compensation Affected by a Bankruptcy Filing?
For a large percentage of the 7.2 million people who lost their jobs since the recession began in December 2007, emergency unemployment compensation is their sole capital. Are they still entitled to these benefits when they file for Chapter 7 or Chapter 13?
Most states do not include your unemployment benefits in the “bankruptcy estate” that can be used to repay debts when you file: federal aid like social security and federal pensions are commonly exempt. However, the rules of federal tax differ between Chapter 7 debt-discharges and Chapter 11 repayment plan bankruptcies.
These rules can be especially confusing during a year when $2400 of your unemployment will go tax-free. If you have received a share of emergency unemployment compensation during the year you file for bankruptcy, chances are it won’t affect your means test, but it can affect the details of your filing.
Inquire with one of Legal Helpers’ adept attorneys to find out how a bankruptcy can affect your day-to-day life. We can help crunch the numbers in your monthly budget when bankruptcy is the best solution: call one of our representatives for a free initial consultation at 1-800-262-1402.
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