After losing a job, one of your major concerns is how you are going to pay your bills. This is a time when many people consider filing bankruptcy. At one time filing bankruptcy carried a social stigma, and only wealthy people filed for bankruptcy, but this has changed in recent years given the state of the economy. (See also Job Loss and Filing Bankruptcy).
The Basics
Most individuals who file bankruptcy file under Chapter 7 or Chapter 13. Chapter 7 involves the sale of non-exempt assets to pay creditors. Most individual chapter 7 cases are no asset cases. Chapter 13 involves debt reorganization and is primarily for individuals that have a steady source of income.
Bankruptcy involves:
- Is a legal proceeding that creditors cannot avoid once it is filed
- Creditors cannot take any action to collect on the debts during the pendency of the bankruptcy
- Depending on the chapter under which a bankruptcy petition is filed creditor may not receive any payment on general unsecured debts
- Discharge in bankruptcy relieves debtor of the legal obligation to repay debts
- Filing fees and administrative fees paid to trustee are limited by statute
- Credit counseling is required
- Bankruptcy filing remains on credit record for at least 7 years
When Should I File?
Filing bankruptcy after losing a job can be advantageous:
- If you have lost a high paying job and are reemployed at a lower paying job, bankruptcy can help relive you of credit card debt and other unsecured debt.
- Is a viable option if any of your income came from self-employment or other business venture that has closed.
- Can help you protect your home if you are current in your payments or in arrears.
- You do not lose all of your assets when you file bankruptcy, some assets are protected
- Gives you a fresh start financially
- Gives you legal protection from debt collectors, wage attachments, liens and harassment for payments you cannot make
- Discharge in bankruptcy protects you from debt collection once your economic situation improves.
Will I Need an Attorney?
A lawyer experienced in bankruptcy law can of great help guiding you as to which option to choose to resolve your financial problems. This is especially true of advising you as to when you should file a petition to give you the best protection. This is an area of the law where it is best to have good legal counsel.
Talk to a Bankruptcy Lawyer to find out if bankruptcy is a good option to help you get back on your feet.
