Arizona bankruptcy and unemployment.
By now many of us hoped and believed that the economy would improve. Recent gloomy job and housing reports indicate that we are far from the end. To this day, I am meeting w/ new clients who have recently lost their job, which means employers are still hurting and need to cut costs (i.e. Bank of America recently laying off 30,000 employees). What is the best course of action when one loses their job and is immersed in uncontrollable debt? How can you best prepare to regain financial stability?
In an attempt to stay afloat, many turn to credit in order to maintain their lives, hoping to survive until the next job comes. Others liquidate their retirement accounts to keep their heads above water. The unfortunate reality is that attaining a new job is very difficult these days, and both these strategies to maintain lifestyles/pay debt can be extremely detrimental to you.
If you are using a credit card to pay monthly bills (utilities, other unsecured debts, etc.) you are digging yourself deeper and deeper in debt. In our experience this “robbing Peter to pay Paul” strategy is not effective. For most, the result is greater debt, which creates greater financial stress. Furthermore, bankruptcy can discharge your credit card debt, however, your spending is under extreme scrutiny, and a creditor can object to recent debts being discharged.
What upsets me the most is when clients liquidate their retirement accounts to pay debt, yet end up filing bankruptcy. Had they filed bankruptcy prior to this, they could have saved their retirement. In a bankruptcy, a debtor’s retirement accounts are 100% exempt, meaning they can usually discharge their debts and keep all their retirement funds.
There are many pieces to the financial puzzle. It is very important to get advice as soon as you feel financial stress. At Mostafavi, Marco & Wimmer we take pride in consulting clients on their most advantageous debt relief options. Keep in mind most everything you do prior to filing a bankruptcy is subject to scrutiny in the bankruptcy court, therefore, it is vital you get educated early. During our free consultation, we will guide you in order to best prepare you for a successful bankruptcy filing.
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