According to a poll from Bankrate.com, nearly three out of ten Americans do not have an emergency savings fund to withstand a serious blow to their income, such as the loss of a job. With such little room for error, a job loss can easily result in mounting debts that, without a source of income, are nearly impossible to repay.
Compounding the problem is the loss of insurance coverage that happens when a person loses their job. The costs of COBRA insurance or personal health coverage can drain the remaining resources the job seeker has left.
Losing income from a job can leave a person with overwhelming debt with few options. While bankruptcy is usually considered a last alternative for many people, it is a real option and a legitimate legal tool to get debt relief and a fresh start.
Unemployment is one of the most common reasons that people file for bankruptcy. If your debt is mounting because you no longer have a source of income, bankruptcy can provide prompt relief.
Generally, if you are unemployed, your best bet for debt relief is to file for Chapter 7 bankruptcy. The primary purpose of a Chapter 7 bankruptcy is to eliminate your unsecured debts. That means you will no longer need to repay your past credit card bills, medical bills, or any other dischargeable debts. It’s important to note that you will still need to repay any non-dischargeable debts you have, including but not limited to, student loans, alimony, or child support.
Chapter 7 bankruptcy is designed for lower-income to median-income earners, often making it the best bankruptcy option for someone unemployed. Ultimately, if you are eligible for Chapter 7 bankruptcy, you will not have to repay your creditors since you do not have money to pay them.
To qualify for Chapter 7 bankruptcy, your income must be below the state’s median income. To determine your income, you will need to take a “means test,” which you can find online. Even if your income is somewhat higher than the median amount, there are some factors that can work to place you within the eligibility range.
If you’ve recently lost your job and are considering filing for bankruptcy, you owe it to yourself to sit down with one of our experienced Salinas bankruptcy attorneys and get answers to your questions. At Miranda, Magden & Miranda, LLP, we want to make sure you understand all of the advantages and disadvantages of a Chapter 7 bankruptcy. You must have all the information you need to make informed financial decisions affecting your future.
If you wish to explore the protections that Federal bankruptcy laws have to offer, contact us for a no-fee case evaluation. We’ll listen intently to understand your situation, and we’ll lay out your options for moving forward. If you feel like you are fighting an uphill battle with your debt.
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