As long as you had a steady job, you were able to cover all your debts and credit card payments without any trouble. You may have even been debt free and able to put a little bit of money away in savings. Then, suddenly, with the loss of your job, you began to struggle to meet the most basic monthly expenses.
It is a common scenario – families and individuals who were once financially secure falling quickly into debt due to the loss of a job. If you are in this situation, you are not alone. Losing a job can cause major debt in a very short amount of time, leaving you struggling to make your monthly payments.
Job loss and credit card debt
When facing a job loss, people often turn to credit cards to cover the costs of everyday items such as groceries or bills. This starts a cycle that can be very difficult to get out of. As debt mounts, interest payments continue to grow, and the stress from the job loss is compounded by the stress from the increasing debt. The cycle continues and the payments may become impossible to cover. At this point, the situation can begin to feel hopeless.
Options for a fresh financial start
Bankruptcy is one option that can provide a fresh financial start. Many people fear filing for bankruptcy because they think it will ruin their financial future forever. The truth, however, is that in some cases, filing for bankruptcy can be the smartest financial choice. Filing for bankruptcy can put an end to harassing calls from creditors. It will stop your credit rating from slipping even further. It can wipe away unsecured debt, such as credit cards, so you can begin to rebuild your credit.
If you are struggling with overwhelming credit card debt due to job loss or any other situation that made it impossible for you to continue making payments, you may wish to consider filing for personal bankruptcy. Explore the differences between Chapter 7 and Chapter 13 to understand which may be right for you.