Bankruptcy may be the solution to the ills caused by underemployment
As the economy improves from the recession of 2008, more and more people who were previously unemployed are returning to work. Although this is mainly a good thing, many are suffering from the problem of underemployment. This problem often manifests itself when a person takes a job that pays significantly less than their previous position. It can also occur in minimum wage jobs that simply do not pay enough to cover basic living expenses or do not offer benefits like health insurance.
Unfortunately a new job may do little to relieve financial burdens. Some individuals return to the work force with large amounts of credit card debt or medical bills that accumulated during unemployment. Some creditors become more aggressive once you return to work because they can garnish wages and/or money in your bank account. All of the sudden, the new wages are insufficient to cover these sudden or unexpected expenses such as medical bills.
Bankruptcy can help
For many that are drowning in debt due to underemployment, bankruptcy is the only feasible choice. Both Chapter 7 and Chapter 13 bankruptcy give the individual a fresh financial start.
Chapter 7 bankruptcy is great for people that do not have enough stable, consistent income to pay all of their debts but they have enough money to keep paying for the things they need, like a home or car. Some people are scared to file chapter 7 bankruptcy because they think they will lose their house or their car. This is not true. Individuals can keep their home and cars as long as they can afford to make payments on the mortgage and/or cars. It is a bankruptcy myth that you cannot keep paid-for items, like cars, furniture, clothing and other household items. Once the bankruptcy has been completed (which takes as little as three months), unsecured debts such as medical bills and/or credit card debts are discharged.
Chapter 13 bankruptcy is a voluntary court repayment plan. Chapter 13 is great for people that return to the workforce and need to stop foreclosure or car repossession. Due to unemployment, many people fall behind on their house payments, or car payments and just need time to catch up the past due payments. Chapter 13 is like an umbrella of protection from creditors, you have time to catch up your car and home. Similar to a Chapter 7, a Chapter 13 will wipe out or discharge a portion or all of the credit card debt or medical bills. A Chapter 13 consolidates bills into a payment plan to be repaid in full or partially over a three to five-year period. Each month, the individual makes a payment towards debts. The monthly payment amount will be affordable, as it is calculated according to income and monthly living expenses.
Bankruptcy is one part of the law that is there to help recently unemployed people or underemployed individuals who do not make enough money to pay all bills. Filing Chapter 7 or Chapter 13 bankruptcy will relieve your financial stress. If you are facing mounting debts due to underemployment, it is wise to consult with an experienced bankruptcy attorney before the problem gets worse with a job or bank garnishment. An attorney can listen to your situation and recommend a solution that will get you back on the road to financial health.