Income and Means Test

• Qualifying for Chapter 7 bankruptcy requires passing the means test. The means test tabulates income and living expenses to determine if a person is below or above the state's median income level for his household size. If the person's disposable income is too high and he is able to pay back some of his debts, he is not eligible for Chapter 7 bankruptcy. Income received within the past six months prior to filing for bankruptcy is used for the means test. Unemployment benefits received during that six month period should be included in Schedule I and Official Form B22A of the bankruptcy petition. Access those forms and the entire petition on the U.S. Courts website or on your state bankruptcy court website.
  
  

Exemptions

• The U.S. Bankruptcy Code prevents unemployment benefits from being used to pay creditors. According to bankruptcy provision 11 U.S.C. §522, the debtor has a right to receive unemployment compensation and can claim that compensation as exempt in Schedule C of the bankruptcy petition. Federal and state laws allow the debtor to claim unemployment benefits as exempt because that money is needed to cover monthly living expenses.
  
  

Chapter 7 Trustee

• Submit documents verifying income, assets and expenses to the Chapter 7 trustee assigned to your case. Find out the trustee's name and address by accessing the court docket via PACER on the state bankruptcy court website. Mail or fax the document confirming the amount of unemployment benefits received from the state, along with all of the other documents requested by the trustee. The trustee assesses the paperwork to confirm the information was accurately included in the bankruptcy petition.
  
  

Discharge

• The bankruptcy court discharges a case once all of the debtor requirements have been satisfied and the trustee has submitted a final account of the case. Creditors can not demand payment for debts discharged in the bankruptcy. The debtor does not have to worry about using her unemployment benefits to pay for debts or property she can no longer afford to keep. She can focus on using unemployment benefits to cover basic living expenses until she is able to find another job or other sources of income.