On July 31, 2020, the weekly $600 unemployment boost is set to expire, and at the moment, it doesn’t appear likely it will be extended once it does. So what happens when this runs out, and you cannot afford to pay all of your bills, and you cannot return to work?

Organize Your Debts

The first thing you need to do is to organize your debts based on type. Debts can usually be categorized as unsecured and secured. Secured debts are ones where a lender or creditors can have the power to repossess or foreclose on a property. This includes cars and homes. Unsecured debts are personal loans, and credit cards — there is no property the debt is secured to, and there’s nothing for the creditor or lender to seize (unless they sue and win a judgment, in which case unsecured creditors will become a judgment creditor.) The reason why you should make an inventory is so you can decide the debts you should pay on time and keep current with if you must pick and choose.

The general rule when it comes to debts is you pay what you want to keep. Because you risk to lose the property associated with a secured debt, you generally want to pay those first— this would include your housing and vehicles. Bills such as utilities should also be paid so you won’t have to deal with living without electricity or phone service.

The reason why you may not want to pay general unsecured debt such as credit cards over secured debt is because these creditors will generally have to sue you and win a judgement before they are able to affect your personal property either through the form of a garnishment, levy, or lien. This is an extra hurdle a creditor must pass before they have a special status. Also, judgment creditors are limited as to how much they can garnish, and what they can levy, so there are some built in protections for consumers.

Bankruptcy

If your financial situation becomes more difficult in the coming months and you find yourself not being able to get out, bankruptcy may also be a good option for you. Bankruptcy protection can allow most debts to be discharged, allowing you to keep certain assets while you prepare for a fresh financial start.

I’ll be happy to discuss your options with you, just give me a call or text at (505) 658-4320 or (424) 205-8058.

William Ha is an attorney serving Los Angeles and Orange Counties in California, and Cibola and Bernalillo County in New Mexico.

For a free 30-minute consultation call or text (714) 805-9623 | (424) 205-8058 | (505) 658-4320‬

The content on this website cannot be considered as legal advice and it does not create an attorney-client relationship.