Job layoffs can be very unexpected. They always have a large effect on a family’s budget. Frequently job layoff and bankruptcy go hand in hand. Debts can simply no longer be paid if the income loss from a layoff is too great. You can, however, do a few simple things to protect yourself from bankruptcy when you are unexpectedly laid off from your job.
Keeping your budget simple will protect you from difficulties that follow getting laid off from your job. A simple budget will include living well within your means and not acquiring large amounts of debt. If you are constantly juggling money to stay afloat or have incurred large amounts of debt, you are setting yourself up. An economic setback like getting laid off will immediately push you into filing for bankruptcy.
A layoff cannot propel you into bankruptcy if all of your “income eggs” are not in one basket. Creating a life where your income comes from multiple sources will protect you if you are ever laid off from your job. Rental income, business income, or multiple job income sources can be used to supplement your income. They can also be used to immediately increase your income in many situations as you look to replace your job. For instance, if you have a small service business on the side, you would likely be able to ramp-up operations quickly to make extra income. Being diverse in your skills and income sources will protect you from bankruptcy when you are laid off from your primary job.
Networking and always lining up multiple income prospects will also protect you from bankruptcy. A layoff situation is not a big deal when you already have multiple relationships where some form of employment can quickly resume. A layoff is not a big deal when you have 3-4 people you can call for at least temporary employment.
If you are overloaded with debt, a job layoff can actually be the perfect time for filing for bankruptcy. In fact, it may be the very reason that you are now eligible for Chapter 7. Chapter 7 is the full debt-release bankruptcy. This type of bankruptcy is dependent upon how much money you are currently making. If your income has dropped, it may be the perfect time to call a bankruptcy attorney. It may be a special opportunity to get relief from your debts.
If you would like more information on getting relief from your debts, make sure to check out our Chapter 7 Bankruptcy page.