If you are receiving unemployment benefits during the same time you are going through a bankruptcy, you may be confused at how your benefits will be affected, and rightfully so. When a person declares bankruptcy, they are not in a good financial situation and are working toward finding a way to start over. It would not be out of the question that the same person who is struggling with hefty debt is also out of work.

In general, people who are dealing with bankruptcy and are receiving unemployment can feel some peace of mind that for the most part, their benefits will not be garnished. However, that does not mean that your benefits are untouchable. When alimony, child support, and money owed to the state are real factors in your life, then your benefits could be at risk. 

If you live in or around the Danville, IN area and you are having problems handling your finances speaking to a Danville bankruptcy lawyer may be beneficial. Bankruptcy can be complicated and to best protect your interests, Christopher L. Arrington is a bankruptcy lawyer in Danville that can help you through your specific situation. 

What Happens to Unemployment Benefits When Bankruptcy is Declared?

If the following exist, then your unemployment benefits could be garnished:

• Alimony.
• Child support.
• Taxes.
• Federal student loans.

Other creditors, though, will have a more challenging task at getting their debts paid. A court judgment must be obtained and then even with this legal determination, a creditor still has to wait their turn. 

Indiana limits how much of a person’s wages can be taken from them at 25% of their disposable funds. Or garnishment can happen if the total disposable funds a person has is more than 30 times that of the federal minimum wage. Whichever of these two is less will be utilized.

When an individual in Indiana files a Chapter 7 bankruptcy, they have a high chance of keeping the unemployment benefits they are receiving. In addition, other assets that a person has could be spared from bankruptcy creditors including:

• If you own property that is not worth more than $8,000.
• The possession of personal health equipment.
• Proceeds from many retirement programs.
• Life insurance.
• Policies that are related to medical care savings. 

Dealing with bankruptcy especially in the absence of a viable job is a distressing situation to be in for anyone. To get a hold of your financial situation it could be in your benefit to speak with a lawyer that understands bankruptcy laws. Figuring out the best scenario for you to be able to take the smallest hit possible will be helpful as you try and build back again after your financial insolvency.

Speak With an Indiana Bankruptcy Attorney Today

Bankruptcy is not always the right choice for everyone, but there are situations where filing for bankruptcy is the best action to remedy a distressing financial situation. If you are having difficulties managing your debt, call the Danville bankruptcy attorney Christopher L. Arrington today to schedule a free initial consultation at (317) 745-4494.