Reasons to File Bankruptcy - Loss of a Job


Bankruptcy is designed to help people who have fallen into dire financial circumstances that are generally beyond their control. There are several reasons why a person might file for bankruptcy. One of those reasons is because they incur huge medical bills that they simply cannot pay. Others get in trouble with credit cards and other debts that get out of control which is another reason to file for bankruptcy. If you are losing your job, you may consider filing as well to help protect your assets during your time of unemployment. Here are some things to keep in mind if you decide to file bankruptcy for whatever reason.

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Keep Your Co-Signers in Mind

Do you have debts with co-debtors? A co-debtor is someone who has signed onto the debt with you and they are responsible for repaying it if you fail to do so. If you are going to file for bankruptcy, those co-signers will be stuck with the responsibility of repaying. If you have a co-signer on your car, home or other debt that you want included in your discharged debts, you should talk to them before filing for bankruptcy.

Know Which Debts Cannot be Discharged

Many people are under the misconception that they can discharge all of their debts when they file for bankruptcy. But did you know there are many debts that you cannot get rid of even in bankruptcy? If you think you can get rid of your student loans, it's nearly impossible to do so. When you owe back taxes, alimony, or child support, you are still stuck with those financial responsibilities as well.

Inform Your Creditors

When you are filing bankruptcy, it's important to let your creditors know. Once you file, they should stop contacting you. If they do contact you after filing, give them the name of the attorney that is handling your case, so they know that they shouldn't be contacting you any longer.

Keep Your House Off the List

If you are losing your job and filing for bankruptcy, you should keep your house off of the list of debts that you want to discharge. It will take several months and, in some cases, a year or more in order to foreclose on your home and force you out. Your job situation may turn around during that time period, but if you list your home as one of the discharged debts, you could lose it sooner. Take comfort in knowing that you'll have a roof over your head even during these difficult financial times.

Losing your job can be one of the most traumatic experiences in your adult life. There are several ways to deal with this crisis, and filing bankruptcy is one of those ways. But if you get back on your feet and have more money, you should consider repaying those debts.


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