Should the Unemployed File for Bankruptcy?

In a difficult job market, some individuals may find themselves in a particularly gruesome financial situation. Depleting unemployment benefits, payments to creditors and other obligations can quickly cause a seemingly hopeless financial situation.

Managing mortgage, credit card and medical debt can become highly stressful and difficult for the unemployed. They often lack enough income to cover unexpected health scares and other expenses, and usually rely on loans. Even before a job loss, many Americans are likely to have existing debt obligations.

To provide an example, the average American household had over $15,000 in credit card debt in 2012.

Unemployment benefits alone may not be enough to cover these existing obligations. For example, in Kansas, the maximum one could receive through unemployment benefits in 2013 was a $420 a week.

How Can Filing for Chapter 7 Bankruptcy Benefit the Unemployed?

Fortunately, there are ways for the unemployed to erase some debt obligations depending on circumstances. Depending on what kind of assets an unemployed person has, filing for Chapter 7 bankruptcy can have several benefits.

One of the benefits of a Chapter 7 bankruptcy is that debtors can reaffirm some financial assets, such as property or a vehicle. Reaffirmations are agreements that a debtor will continue to pay a portion of what is owed before a bankruptcy is finalized. If we use the example of a lease on a vehicle, the benefits are apparent right away, as having a car while unemployed will make it easier to find another job.

In addition to reaffirmations, discharging debts can stop harassment from creditors, allowing an unemployed person to focus his or her remaining finances on finding work and building a better life.

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The Sader Law Firm – Kansas City Bankruptcy Attorneys

Did You Know? Americans owe a combined total of $11.74 trillion in debt, including mortgages, student loans and credit cards.