Navigating Debt After a Federal Layoff: What You Need to Know

Hi, I’m Emil Fleysher, a Florida bankruptcy attorney and the owner of Fleysher Law, PA. If you’ve recently been affected by the wave of federal layoffs, you’re not alone. Losing your job can be overwhelming—especially when you have financial obligations to meet. The good news is that there are steps you can take to protect yourself, your assets, and your financial future.

Let’s talk about how to manage your debt during this transition and why bankruptcy may be a powerful tool for getting back on your feet.

Step One: Assess Your Financial Situation

The first thing you’ll want to do is take a hard look at your finances. Create a budget based on your new income—whether that’s severance, unemployment benefits, or savings. Prioritize essential expenses like rent or mortgage payments, utilities, and groceries. If you have significant credit card debt, loans, or medical bills, now is the time to start planning how to handle them.

Step Two: Avoid Common Mistakes

When facing financial uncertainty, people often make decisions that hurt them down the road. Here are a few things to watch out for:

• Dipping into retirement savings: Your 401(k) and IRA are usually protected in bankruptcy, meaning creditors can’t touch them. Don’t drain your retirement fund just to stay afloat temporarily.
• Taking out high-interest loans: Payday loans and cash advances may seem like a quick fix, but they can lead to a cycle of debt that’s difficult to escape.
• Transferring assets to friends or family: If you transfer money or property right before filing for bankruptcy, the court may see it as an attempt to hide assets and reverse the transfer.

When Bankruptcy Makes Sense

Many people avoid considering bankruptcy because of misconceptions or stigma. However, bankruptcy is a legal tool designed to give honest, hardworking people a fresh start. If you’re struggling to keep up with debts and your job loss has put you in financial jeopardy, bankruptcy may be a smart move.

• Chapter 7 Bankruptcy: If your income has dropped significantly, you may qualify for Chapter 7, which wipes out most unsecured debts like credit cards, personal loans, and medical bills. Timing is crucial—if you’re unemployed now but expect to find work soon, filing while your income is low may help you qualify.
• Chapter 13 Bankruptcy: If you still have some income and want to keep assets like your home or car, Chapter 13 allows you to restructure your debts into an affordable repayment plan over three to five years.

Timing Considerations for Filing Bankruptcy

If you’re considering bankruptcy, timing is everything. Here’s what you need to keep in mind:

• Income Matters: If you expect to find a new job soon, your current lower income may help you qualify for Chapter 7 before your earnings increase again.
• Recent Transfers or Large Purchases: If you’ve recently transferred money or made big purchases, it may be better to wait before filing to avoid issues with the bankruptcy trustee.
• Tax Refunds & Windfalls: If you’re expecting a tax refund or severance package, planning your bankruptcy timing can help you keep those funds rather than having them used to pay creditors.

Contact Our Florida Bankruptcy Attorney for a Free Case Consultation

Losing a job is stressful, but it doesn’t have to define your future. At Fleysher Law, PA, I’ve helped thousands of people in Florida eliminate debt and rebuild their financial lives. If you’re feeling overwhelmed by debt after a layoff, I’m here to guide you through your options and help you make the best decision for your situation.Call me today for a free consultation, and let’s get you back on track to financial stability.