If you are contemplating filing for personal bankruptcy as a result of loss of your job, you may be glad to know that you are not alone. The loss of a job is one of the most unfortunate things that can happen to a person. This is because when one is unemployed there is no steady source of income or a means of financial security that can enable one to apply for loans like mortgages and/or credit cards. The reason why one may not be able to access these loans is due to the fact the debtors or lenders will need verifiable proof that one is employed.
If you are one of the rising numbers of individuals who have lost their jobs and on unemployment benefits, you may have come to the realization that these unemployment benefits are not sufficient to pay off your debts. You may be glad to know that there are provisions of the Bankruptcy Act that will help. The provisions of Chapter 7 or Chapter 13 will go a long way in clearing these debts once and for all. It is good that you should know the bankruptcy filing process in order to have the process run smoothly. Declaring personal bankruptcy will have some effect on your unemployment benefits.
Unemployment and job loss forms the foremost reason why most individuals file for bankruptcy. Actually, studies show that over a third of all bankruptcy filings are as made by individuals who have become unemployed by virtue of losing their primary source of income. When one files for chapter 7 bankruptcy as a result of unemployment, it essentially means that your unemployment benefits cannot and will not be seized as a result of your debtors' estate. In real sense, the Federal government has exempted these benefits from being seized since you are dependent on this income to stay afloat. This exemption is put into place so that an individual is able to preserve some assets that one depends as a source in income such as life insurance payments, child support, alimony, social security checks among other forms of payments. This helps to protect your unemployment benefits because they form a lifeline for financial support for you and your family.
Filing for chapter seven bankruptcy may form one of the best choices for individuals who have just become unemployed, while filing for chapter 13 bankruptcy also referred to as wage-earners bankruptcy, will go a long way in helping you set up an scheme of payment dependent on what is left over(monthly disposable income) after the payment of bills. As a result of unemployment, many individuals may not have this disposable income. If you need to file for bankruptcy as a result of unemployment, you should make efforts to talk to a bankruptcy lawyer for the way forward.