Can I Go Bankrupt If I Am Working?

When many people hear the word bankrupt, they picture a person who has fallen on hard times and has no job or any other viable income stream. However, although having a job can stave off having to declare bankruptcy, there are many situations where having a job will not protect you from having to declare bankruptcy.

In fact, the comfort and security of a job can cause you to set in motion the factors that can send you on a downward path towards bankruptcy.

How Can You Have a Job and Still Go Bankrupt?

When someone has gone bankrupt, it simply means that they have accumulated so much debt that they are no longer able to pay them off in time. This means that if the proportion of your income is much smaller compared to the amount of debt you've accumulated, you will not be able to pay off the whole debt in a reasonable time-frame.

Many people will have accumulated a significant amount of debt by the time they find a stable job. Student loans, for instance, are quite common. If someone in such a position goes ahead to buy a car and a house, their income might be stretched thin. All it would take is an unforeseen problem that's not covered by insurance to cause such a person to start defaulting on payments.

What to Do Next?

By the time many people decide to do something about the mountain of debt they are no longer able to keep up with, it's usually quite late. The added fines and fees may have caused the debt to grow significantly.

If you suspect that you won't be able to keep up with your payments in the near future, you can declare chapter 13 bankruptcy. Doing this can give you more time to get your house in order so you can come up with a plan for how you will pay off your current debtors.

The Other Option

Unfortunately, chapter 13 bankruptcy only applies to individuals who still have a chance of clearing their debts. If you don't have a steady job or if your job doesn't pay much, it's possible that you'll have no chance of clearing your debt.

In such a case, it may be helpful to hire a bankruptcy attorney from a place like the Martinez Law Firm so you can declare chapter 7 bankruptcy. This will result in much of your unsecured debt being written off. However, it will affect your creditworthiness for a long time.