Covid Bankruptcies After Layoffs in Arizona
At the start of 2020, the American unemployment rate was extremely low and many Americans enjoyed gainful employment in jobs they thought were very secure. The economy looked strong and there were no signs that employees should be concerned about cutbacks and layoffs.
And then the COVID-19 pandemic hit and businesses were forced to close. Making up for the loss in revenue during these closures meant unexpected layoffs.
Even with loans and incentives from the government, companies could not pay all their employees. And despite increases in unemployment, many people have suffered financially and cannot find a way to make ends meet.
Job loss is a common cause for filing bankruptcy
The second most common reason people file for bankruptcy is due to a job loss (the first is medical expenses). So if you’re facing this challenging decision, know that many others in your situation have also faced similar financial circumstances.
When people think of filing for bankruptcy, they likely think of people who get in over their heads financially by spending more than they make. Poor or excessive use of credit is the third most common reason for people to file for bankruptcy, but that doesn’t tell the whole story.
Changes in income from a job loss can make it so that you suddenly can’t pay for all those financial responsibilities you took on through credit.
Consolidating your debt can be a good place to start. Debt consolidation can help you achieve lower interest rates and more manageable monthly payments.
But there also can come a point when no amount of debt consolidation can help make monthly payments reasonable after you’ve lost a job.
Another common cause of bankruptcy is divorce or separation. Total household income can offset some changes to your employment situation. But when divorce or separation takes place during hard times, finding a living situation and paying spousal support can send you into a terrible financial position.
Finally, unexpended expenses are the fifth most common cause of bankruptcy. In many cases, this is the final financial burden that makes it impossible to pay your bills each month. It might be a natural disaster that harms your home. That leaves you without a wardrobe or reliable transportation to even look for a job.
Financial hardships can come from anywhere. But job loss can exacerbate a bad situation. The COVID-19 pandemic has caused major disruption over the last 18 months to employment opportunities throughout Arizona and the rest of the country.
What happens if I file for bankruptcy in Arizona?
Individuals facing bankruptcy due to COVID-19 job losses are in a position they never imagined they would be. As such, you likely know little to nothing about what happens after filing for bankruptcy.
The days of being comfortable financially are not over the day you file for bankruptcy. In fact, this decision could help you get back to living the way you always wanted to.
Chapter 13 bankruptcy will put limitations on your ability to apply for new lines of credit during the 3-5-year payment period the courts designate to help you pay off your debt. But afterward, you can enjoy more financial freedom.
Chapter 7 bankruptcy will also leave you with several years where new lines of credit will be challenging. After your debt is discharged, you’ll need to rebuild your credit for several years by showing good financial decisions. But this move can give you time to find a new job and get back on your feet after COVID-19 layoffs.
If the pandemic has hit your finances hard, contact our office. We’ll explain your options and help guide you back to financial stability and freedom.