When a debtor faces a job loss, the first thing they should do is apply for unemployment insurance. Don’t make the assumption that you don’t qualify for unemployment insurance, apply and allow them to approve or not approve your benefits. One of the mistakes that many unemployed workers make is waiting too long to apply for their unemployment benefits, don’t make that mistake, apply as soon as you become unemployed.
Create an accurate budget that lists all of your expenses, including monthly debt obligations and your income (i.e. unemployment benefits, alimony, child support etc.). With an accurate budget you will have a clear vision of the dollar amount of your expenses and whether you can truly afford them while being unemployed.
Attempt to get a forbearance on as many of your monthly debt obligations as possible. Some creditors may be willing to give you at least 30 days forbearance if you ask. But remember, get any agreements in writing if possible. With at least a 30 day forbearance on most of your debts, you can buy yourself some time to create a plan for handling your bills while unemployed.
When a debtor becomes unemployed it may be nearly impossible for them to continue making payments on their debts. If this is the case for you after suffering a job loss, it is time to consider bankruptcy. Make an appointment with your bankruptcy attorney and show him/her the budget you created. Remember, bankruptcy can help you discharge unsecured debt, repay secured debt under reasonable terms or surrender secured property such as a car or house during the bankruptcy case. Most importantly, bankruptcy gives you the leverage with creditors that most debtors lack when they choose not to file bankruptcy.