Economists seem to inhabit a world that bears little resemblance to the one where we toil incessantly in pursuit of our bread and butter. Our ordeal is just points on a graph to them, and from their bird’s eye view, it looks like the economy is doing great.  Economists rejoice that the unemployment rate is only 4.2%, but they have not thought much about the lived experience of the folks who get a paycheck, but that paycheck is not enough for them to maintain the financial status quo.

The Ludwig Institute for Shared Economic Prosperity (LISEP) encourages us not to consider just the officially unemployed folks, but also a group that LISEP calls functionally unemployed, a group which, according to LISEP’s most recent report, includes nearly a quarter of working-age Americans. Being functionally unemployed is as miserable as it sounds, but you have the right to pursue debt relief options, including filing for bankruptcy protection. To find out more about filing for bankruptcy when your employment income is not enough to cover necessities, contact an Oakland chapter 7 bankruptcy lawyer.

What Does it Mean to Be Functionally Unemployed?

LISEP’s definition of functionally unemployed includes everyone who works full time, or tries to work full time, but earns such a low income that the most they can afford is rent, groceries, utilities, transportation, and minimum payments on debts. Splurges are out of the question, unless it means racking up even bigger buy now pay later (BNPL) debts than the borrower already has.  These are some situations where you might be functionally unemployed:

•   You earn minimum wage in an area with a low minimum wage and a high cost of living. This applies more to states in the Southeast than in California, where the cost of living is high, but minimum wages are among the highest in the country.
•   Your employer always schedules you at a part-time workload that falls just short of full-time, so you cannot get a second part-time job with a consistent schedule, but you also do not get the benefits to which full-time employees are entitled.
•   Your employer issues you a 1099 instead of officially making you an employee. Therefore, almost a third of your paycheck goes to paying your Medicare and Social Security taxes out of your own take-home pay.

Should Functionally Unemployed Choose Chapter 7 or Chapter 13 Bankruptcy Protection?

Everyone, regardless of employment status or income level, has the right to file for bankruptcy protection. Chapter 13, where there is no risk of liquidation of assets as long as you comply with the court-ordered repayment plan, is ideal for borrowers who earn a steady income and have substantial assets. Most low-income filers, including the functionally unemployed, choose Chapter 7, though, because most of them do not own any assets except those that are exempt from liquidation.

Contact the Law Office of Melanie Tavare About Discharging Your Debts So You Can Continue Living Paycheck to Paycheck

A debt relief lawyer can help you discharge your eligible debts in bankruptcy court. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.