One of the most cited reasons for filing bankruptcy is unemployment or a reduction in income. The loss of income can come from death or divorce of the primary wage earner, layoffs, and cutbacks at work. Job-related financial stress is one of American’s significant factors for filing bankruptcy.
We’ve heard it before that you should have six months of your monthly debt in savings in case of emergencies. Realistically, most of us have very little to no savings. If you’re lucky enough to get unemployment benefits, it would be difficult to pay all of your monthly obligations on that amount. If you have no income at all and no prospects of a job, even bankruptcy may not be able to protect all of your assets from creditors.
Filing bankruptcy can give you some time to figure out how you plan to pay your debt or have it wiped away in Chapter 7 bankruptcy. If You have a mortgage and would like to keep your home, Chapter 13 bankruptcy will give you three to five years to make up the payments. You will have to continue making the current payments if you wish to continue to use the collateral. You must have some source of steady income to be eligible to file Chapter 13.
Getting behind in your debt while you’re waiting for a better job or your hours to pick back up can be very stressful. You may consider selling your vehicle or other assets, but if you owe more than what it’s worth, you will have to pay out the balance. This will leave you without a car to search for a job or drive to your current one.
Another temporary fix people consider is cashing in their retirement account to catch up on bills. Besides the financial penalty of taking out the money early, you may find yourself unable to repay that money and struggle in your retirement years with no income.
If your wages have been cut and you were struggling to make ends meet, consider talking to a Plano bankruptcy attorney to find out how you can get financial relief.