When you lose your job, you don’t necessarily have to turn to bankruptcy for help right away. However, if you cannot find work and are struggling to make ends meet, then bankruptcy may be something to look into.
Bankruptcy can be beneficial if you have many unsecured debts, like credit card debts, to pay off. However, some types of debts, like student loans or taxes, won’t likely be wiped out with bankruptcy. So, depending on your situation, bankruptcy may or may not be a good solution for you.
While bankruptcy can be a great option for some people, others may want to try other options first. Some options that allow you to avoid bankruptcy may include:
- Filing for unemployment
- Setting a new baseline budget
- Calling lenders to report job loss: Some credit cards have insurance that will wipe out what you owe in the case of losing a job
- Looking for part-time work
- Qualifying for hardship programs through your lenders
If you’ve looked into these options and haven’t found one that will help you stay in budget, then bankruptcy could be a good choice.
Most people choose either Chapter 7 or Chapter 13 bankruptcy when they’re looking at bankruptcy in general. These both have different requirements. If you’re out of work, Chapter 7 may be a good option, since it will eliminate qualified debts in the least amount of time.
When you lose a job, your world may feel like it’s in a tailspin, but there are many ways out of difficult financial situations. Our site has more on what to do if you’re struggling with debt and are considering filing for bankruptcy.