Being injured at work can be both emotionally and financial devastating; but what happens when your injury prevents you from ever working again? One of the first things disabled workers do when they discover they can no longer work is apply for disability insurance through the state.
But a growing number of disabled workers are also making a trip to their bankruptcy attorney, here's why:
- Most people who apply for disability insurance benefits are denied the first time. In the meantime their debts and bills keep piling up. By filing for bankruptcy they can discharge much of their unsecured debt and protect their existing assets such as a retirement account, a home or their car and other valuables.
- Receiving their first disability insurance check can take as long as 3 years. Many newly disabled workers are discovering that they really need to file bankruptcy because there is no way they can service their existing debts for that long using their savings, unemployment insurance income or other benefits they are receiving.
- Since bankruptcy allows student loans to be discharged in bankruptcy if they are proven to be an unreasonable burden, some newly disabled workers use bankruptcy to discharge their student loans and thus further reduce their monthly debt obligations.
If a newly disabled worker decides to file bankruptcy, they need to make sure that they do not charge any expenses to their credit cards immediately before filing bankruptcy. If the debtor uses credit cards to pay for expenses before filing bankruptcy, those charges could be non-dischargeable.