Filing Bankruptcy After A Job Loss

October 22, 2011 by  Filed under: Bankruptcy 

Many American families rely on two incomes to pay the monthly bills and set a little aside as savings. When one income is unexpectedly reduced or eliminated, the family is thrust immediately into a crisis mode. Often there is not enough money to pay all of the family bills, so touch choices must be made.

The first thing to do is to be realistic and not overreact. It is important to use savings wisely during this time and to safeguard retirement. Spending these funds to maintain your lifestyle is not good financial management, and will have long-term consequences. In most cases a substantial amount of cash and all of your retirement funds can be protected if you need to file bankruptcy. Please, if you take anything away from this article, do not take money out of a retirement account to pay bills without speaking to a bankruptcy attorney! Additionally, most assets are protected during bankruptcy, so it is not necessary to sell assets to pay creditors.

Second, prioritize your spending. This may mean eliminating or reducing certain “luxuries” like premium television channels or inflated cell phone plans. Creditors must be prioritized also. For instance, it may be more important to pay the car payment instead of a credit card. If you file a Chapter 13 bankruptcy, your secured creditors receive a higher priority than unsecured creditors. That means your home mortgage and car payment are paid before credit cards and medical bills. You keep the house and car while unsecured creditors receive little or nothing. In a Chapter 7 bankruptcy, you may keep secured debt such as your mortgage and car payment in exchange for keeping the collateral (house and car). You must continue to make your regular monthly payments and show the bankruptcy court your ability to do so.

Third, understand the consequences of late payment and default. There may not be enough money to pay all of your creditors, so what happens if you don’t pay a bill? In some cases filing bankruptcy will actually help your credit over the long haul. Bankruptcy stops all creditor action, including negative reporting to the credit bureau. By filing bankruptcy you can avoid additional negative reports like late payments, default, charge-offs, repossessions or foreclosures.

Whether to file bankruptcy after a job loss depends on a number of circumstances. The best advice is to consult an experienced bankruptcy attorney and discuss your financial options. Bankruptcy will help you reorganize your finances when there is not enough money to pay all creditors. Your attorney will help you prioritize your spending and protect your assets.

Charles Glanzer is committed to helping people resolve their financial problems and get them back on the road to financial freedom. If you are having trouble with your debt, Charlie will provide you with the help you need. Bankruptcy laws exist to help people get out of debt and get a fresh start. Charlie understands and is sympathetic to the financial difficulties that so many American families are facing. Charles Glanzer has the experience and knowledge you need to help you take control of your financial future.

Take the first step towards financial freedom by visiting Charles at

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