Losing a job is a traumatic experience no matter what the circumstances, and most people like to believe their ill gotten fate is just a bump in the road. Many will try to keep up with bills even though they do not have the income to handle it. They might access their “rainy day” savings account in order to keep their credit intact and avoid filing for bankruptcy. But many who choose that path simply delay the inevitable, especially if their unemployment turns out to be long term. While your intentions are good, looking too hard for the light at the end of the economic tunnel, can make you feel more like a deer caught in someone’s headlights.
When should you file bankruptcy after a job loss?
The answer to this question will vary depending on your circumstance, but it is one that must be examined sooner rather than later. If you are sure you can avoid filling you can try and keep up for a little while, but it is important to be careful not to tap out your savings. If you have a lot of savings, you can declare a “mercy balance” that does not translate into an empty bank account, and by all means don’t start dipping into your retirement account or your child’s college fund. It could happen, you could get lucky and find a job that is better than the one you lost. But putting all your eggs in the “it’ll get better” basket will likely just leave you with egg on your face.
As soon as you catch that “I can’t do this anymore” bug it is time to talk to a bankruptcy attorney and review your situation. A conversation does not always equal filing, and there are cases when debt settlement or consolidation plans can be worked out. If bankruptcy is inevitable, you’ll need help deciding which type of bankruptcy is most appropriate for your family.
Do receiving unemployment benefits affect my ability to file for bankruptcy?
Filing for bankruptcy may be something that often happens to the unemployed, but a bankruptcy will not prevent you from collecting your unemployment benefits. Receiving unemployment also will not prevent a bankruptcy from going through.
If you’ve already filed a chapter 13 bankruptcy before your job loss, and unemployment makes it difficult to make agreed on payments, it is best to seek a modification of those payments or you may possibly want to convert your chapter 13 bankruptcy into a chapter 7 bankruptcy that does not require payments
How do I come up with the money to file for bankruptcy without a job?
The ability to scrounge up money is one of the reasons why unemployed persons are encouraged to file sooner rather than later. If you have that “rainy day fund” that will help you pay fees that’s fine. If you don’t have something put away it may be well worth it to get together the money for the filing fee, as it will likely be a small amount compared to the amount of debt that will be lifted. Filing for bankruptcy may mean you are gaining one bill, but you will be losing many more. In addition you won’t be getting threatening phone calls and letters demanding money you just don’t have.
Will Anyone Hire Me After a Bankruptcy?
Different employers have different requirements when it comes to how they figure credit rating into their hiring criteria. Those who apply for government or public jobs can’t be denied a position because of a bankruptcy filing. When a potential employer runs a background check a bankruptcy may be a red flag for some of them, but it is also likely that having difficulty with bills will be a similar red flag. Some employers will simply not care, and others may even see your bankruptcy filing as a sign that you are committed to making a new start.
Going through a period of unemployment is difficult enough without having to battle financial turmoil. The income received from unemployment represents only a fraction of what your family is accustomed to, which makes it that much more important to get rid of overwhelming debt and invest what you do have in your family and their future. Whatever decision you make about bankruptcy doesn’t have to be made alone. If you’re dealing with a drastic drop in income due to unemployment, seeing a bankruptcy attorney promptly can minimize the financial impact and help clear your mind to pursue the next chapter in your life.
Photo by erix!