If you’re living paycheck to paycheck because a significant part of your income is being used to pay old credit card bills, medical bills, very old taxes or other claims that could be discharged in bankruptcy, then discharging those debts in a Chapter 7 or Chapter 13 bankruptcy case will free up cash that would give you or your family some breathing room at the end of every pay period.

On the other hand, if aren’t paying on these debts but you’re still struggling to pay regular recurring monthly bills like the mortgage, the car payment, utilities, and put food on the table just because there’s not enough money coming in, bankruptcy by itself won’t increase your income and may not help you. That’s why it may not pay to file bankruptcy if you’re not working and you have no income coming in because there’s no income for you to protect from your creditors. What bankruptcy really does is give you protection from your creditors to hold onto your income and your assets.