Can you file bankruptcy on unemployment - NYS Department of Labor benefits affected?
I'm drowning in debt from medical bills and credit cards, been thinking about filing bankruptcy but I'm currently collecting unemployment from NYS Department of Labor. My weekly claim amount is $405 and I have about 8 weeks left on my claim. Will filing bankruptcy mess up my unemployment benefits? Can the trustee take my weekly payments? I read somewhere that unemployment might be protected but I'm not sure if that applies to New York. Has anyone been through this situation before?
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Beatrice Marshall
Unemployment benefits are generally protected in bankruptcy proceedings. Under federal law, unemployment compensation is considered exempt property, meaning the bankruptcy trustee cannot seize your weekly NYS Department of Labor payments. Your current claim and any future claims should continue normally. However, you should definitely consult with a bankruptcy attorney to understand how this applies to your specific situation in New York.
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Mae Bennett
•That's a huge relief! Do you know if I need to report the unemployment income on the bankruptcy paperwork though?
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Melina Haruko
yes you have to list all income including unemployment on your bankruptcy petition, but like the other person said it's protected. I filed chapter 7 last year while on unemployment and my weekly claims weren't touched. the trustee asked about it but that was it
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Mae Bennett
•How long did your bankruptcy take to complete? Did it affect your job search requirements for NYS Department of Labor?
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Melina Haruko
•took about 4 months total and no it didn't affect my job search at all. you still have to do your weekly claims and look for work same as before
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Dallas Villalobos
I had trouble reaching someone at NYS Department of Labor when I needed to verify my income for my bankruptcy attorney. The phone lines are always busy and I kept getting disconnected. Eventually found this service called Claimyr (claimyr.com) that helped me get through to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Saved me hours of calling and getting nowhere.
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Reina Salazar
•How much does something like that cost? Seems like it might be worth it if you're dealing with bankruptcy paperwork deadlines.
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Dallas Villalobos
•It was definitely worth it for me since I needed that income verification quickly for my lawyer. Much better than spending whole days trying to get through on my own.
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Saanvi Krishnaswami
Just want to add that you should inform your bankruptcy attorney about your unemployment claim right away. They'll need to include it in your means test calculation and list it as income on Schedule I. Also make sure you understand that while your current unemployment is protected, any future wages from employment you get after filing might be subject to different rules depending on whether you file Chapter 7 or Chapter 13.
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Mae Bennett
•I was planning on Chapter 7. So if I find a job while the bankruptcy is pending, that could complicate things?
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Saanvi Krishnaswami
•In Chapter 7, wages earned after filing are generally yours to keep, but your attorney will explain the specifics. The key is being upfront about everything from the start.
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Demi Lagos
glad to hear unemployment is protected, was worried about this myself
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