Unemployment and Bankruptcy

With the unemployment rate higher than it has ever been in recent history, only a very few can proclaim themselves debt free. Personal debt has followed closely behind the unemployment rate reaching new heights that have not been seen in recent history. How can unemployment and bankruptcy be handled so as to maintain one’s sanity?

It’s not your Fault

First it is fundamental to sanity to offer some positive words that reinforce the will and ability to endure tough times. Remember getting laid off, remaining unemployed and the debt that follows is not your fault. You, as breadwinner did nothing wrong, you are not being punished and you are very valuable to your family and friends who love you sincerely. If it were up to the average unemployed person, there is no doubt they would work if work was available. Collecting an unemployment check that doesn’t cover half the expenses of the average family, is not a cushy opportunity to take advantage of the system and live off of the hard work of others. Anyone who has been unemployed for any long stretch of time understands how financially challenging it is to make it on unemployment once savings have been exhausted.

Your New Job is to Find a Job

With mass unemployment comes what feels like a virtual freeze-up of hiring opportunities. Scared is the word used to describe the hiring climate in much of the world today. Too scared to put out money that might be needed in the future many companies refuse to hire new workers. Finding a job in such circumstances can take years not just months. It is not unheard of to spend hours upon hours setting up interviews, handing out resumes, and networking with anyone who might be able to assist the laid off worker. Days followed by months of getting nowhere can leave the self-esteem in a fragile state. There is no better time to give oneself a pep talk about how your current situation is not your fault! Be determined to keep up the job fight for as long as it takes, truly your new job is now to find a job, pure and simple.

Facing Reality

Prolonged unemployment takes a terrible toll on the family budget. While in theory it may seem obvious, in practice facing our financial limits may not be easy. Have you found yourself trying to live the same way you lived when your family was fully employed?

For some families appearances are all important, in order to keep up appearances buying and spending habits cannot change. Whether an object or activity can be afforded matters not as long as it looks to those on the outside as if nothing has changed and your unemployment picture is just a temporary inconvenience.

Facing reality means accepting that behaviors and actions must change. Needs and wants must be precisely defined and budgets must be set-up and followed

Cell phone usuage, vacations, dinners out are just some of the areas where cut backs can be made.

Cable television though viewed as vital to many households in truth is a luxury that sometimes has to be cancelled during times of unparalled economic hardship, if not completely canceled than at least cut back to the most basic cable service.

Marriage Falls by the Wayside

Deep financial worries, like chronic illness can tear a marriage and families apart. The stress is unrelenting as bill collectors tend to show no mercy and repeatedly call to remind you how broke you are. Unwise spending can lead to shouting and arguments stemming from frustration and disappointment. Guilt can easily become the driving force behind parents indulging a child’s every whim whether the money is there or not. Under the burden of such constant anxiety and strain, it is no wonder divorce is the relief many couples seek.

Filing for Bankruptcy

Bankruptcy has now become a more viable option as debt increases and unemployment worsens. The credit card trap has been most effective in pushing families over their financial tipping point. At first, credit card use is viewed as just a temporary stop-gap until regular employment is once again attained. Unfortunately, families learn much to late that credit card debt is now just another unpaid bill growing with every passing month. Although some credit laws have been recently adopted to stop banks from unfairly stock piling fee on top of late fee, it still has not been a help to those who have maxed out their credit cards hoping to gain more time before the new job is found.

While bankruptcy does affect a credit standing, it must also be remembered that the bankruptcy laws also provide a do-over for anyone swamped in debt because of credit card debt, illness or even divorce and unemployment.

Most people only need one do-over to get back on level ground financially. Since it is available, consider checking it out if your debt has no end in sight. The peace of mind that comes when the bill collectors stop has to be indescribable to a family stressed out my uncontrollable events.

Standard legal advice states that bad credit will exist for only two years after bankruptcy is declared. Compare two years to the amount of time individuals are hounded and trapped by long term debt and it is easy to see the escape hatch should be opened.

Consulting with a lawyer who specializes in bankruptcy law is most advisable. Of course a bankruptcy will remain on the credit file for 10 years. In some cases new credit cards have been offered immediately after final bankruptcy papers have been approved. Rebuilding credit is possible after declaring bankruptcy.