Losing Your Job and Personal Bankruptcy: What You Should Consider
More Americans have filed for personal bankruptcy over the last several years at rising rates, suggesting that more consumers are struggling with debt. Many of those debtors who file for bankruptcy have lost their jobs and have been unable to find new employment that allows them to cover their debts. Indeed, according to a recent report from NPR, many debtors are finding themselves in positions where they have recently purchased new homes, have lost their jobs shortly thereafter, and take on more debt than they can afford to repay by the time they once again become gainfully employed.
Data from the Administrative Office of the US Courts shows that there were more than 500,000 personal bankruptcy filings in 2025 alone, which represents “a nearly 50 percent jump from three years earlier,” the report notes, drawing on court data. By March 2026, personal bankruptcy filings had risen by approximately 12 percent from the same time in 2025. If you are considering personal bankruptcy after a job loss, what do you need to know?
Eligibility for Chapter 7 Bankruptcy is Based on Recent Six Months of Income
If you lost your job very recently and are trying to determine if you will be able to pass the “means test” in order to file for Chapter 7 bankruptcy since you are no longer earning the same income, it is important to know that there is a look-back period for Chapter 7 eligibility.
To determine whether you can pass the means test in order to file for Chapter 7 bankruptcy, your average income over the last six months will be used for purposes of the means test. Accordingly, if you only recently lost your job and would not otherwise be eligible for Chapter 7 bankruptcy, you may need to wait in order to become eligible to file.
Bankruptcy After a Job Loss, Debt, and a New Job
Can you still consider bankruptcy if you were recently hired for a new position after being without a full-time or lucrative job for quite some time, such that you accrued a significant amount of time? You will certainly be able to file for reorganization bankruptcy, which can also allow you to avoid foreclosure if you are behind on mortgage payments.
After a job loss, taking on debt, and eventually getting a new job, you could nonetheless be eligible for Chapter 7 bankruptcy. To determine which type of bankruptcy is right for you and whether you qualify, you should seek legal advice from an attorney who handles personal bankruptcy cases in South Florida.
Contact a West Palm Beach Bankruptcy Attorney Today for Assistance with Your Bankruptcy Filing in the Aftermath of a Job Loss
Are you currently considering a personal bankruptcy filing after a job loss or a loss of pay or hours in your current position? Whether you have questions about bankruptcy eligibility or other aspects of consumer bankruptcy filings, one of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC can speak with you today about your financial circumstances and your options. Contact us for more information.
Source:
npr.org/2026/07/29/nx-s1-5896065/personal-bankruptcy-rates-rising
