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Is bankruptcy appropriate after a layoff?

Perhaps you've seen the writing on the wall for some time — the dismal quarterly profit reports, the slowly-shrinking workforce — or maybe it came like a bolt from the blue. But either way, the day that you read your own name atop the pink layoff slip will be a shock regardless.

The news of a layoff can undermine a worker's confidence, bring on bouts of depression and erode the infrastructure of one's life. Before doing something that you will later regret, it's important to take stock of your situation and make the wisest decision possible.

Below are some suggestions to act on immediately in the hours and days following your layoff.

Learn whether or not you will receive a severance package

Some layoffs are accompanied with various "golden parachutes" that vary widely in their largesse toward the former workers. For instance, the company may agree to pay you a few weeks of full or reduced pay to help you while you struggle to transition to another career position. Others may allow you continued access to health care benefits or provide training to make you more employable.

To learn where you stand with your former employer, speak to the human resources representative about a possible severance package.

Spruce up your resume and other employment documents

Before leaving your employer, if you were on good terms with your boss and this was unrelated to any career pitfalls, consider requesting that he or she write a letter or recommendation that will open employment doors elsewhere.

Regardless, you should also update your resume and revamp your cover letter tweak. If you need a little help in this department, access free resources through the local unemployment office, community job centers and job placement offices at local universities.

Network with people you know from your former job, your church and even your doctor's office. You never know when somebody may be looking for a person with your particular job skills to fill a plum position. Enhance your interview skills by participating in free workshops or even role-playing with a friend.

Fill out an application to qualify for unemployment benefits

Usually, you must wait a full week after termination to qualify for unemployment compensation benefits. Any severance benefits will probably delay the application process as well. But eventually, if you were laid off from your job, you will be eligible for some form of unemployment benefits.

As hard as it can be, it may be necessary to apply for types of public assistance, such as food stamps or welfare benefits, Medicaid, etc. Don't let your pride cause your family to suffer further.

Begin prioritizing your expenses

Gone are the daily Starbucks coffees. Kiss the manicures and barber shop shaves good-bye. Ditch the dinners out and the movie dates. You are operating under circumstances of austerity now.

Start doing your own lawn care, trimming your own bangs and learn to cover your gray hair from a box off of the supermarket shelves. Get rid of the cable bill and choose Amazon Prime instead, where at least you can get free shipping on purchases along with watching TV shows and movies.

Cancel magazines and other subscription services and used the pro-rated refunds towards bills. Check into free- or reduced-fee lunches for school children and begin shopping for gently-worn clothing at second-hand shops in area.

Find alternative ways to earn money

Could you put your "honey-do" skills to work as a handyman, teach yoga classes, build web pages for mom-and-pop businesses? Even agreeing to barter with others, e.g., child care for plumbing or electrical repairs, can bring short-term financial relief.

When a bigger fix is needed

Ultimately, your good intentions and reduction in expenses may be insufficient to dig yourself out of the morass of debt following an unanticipated layoff. If you find yourself unable to keep up with your credit card bills and basic expenses, you may need to consider filing for bankruptcy under Chapter 7.

Discuss your circumstances with a Lexington bankruptcy attorney to ensure that all contingencies have been examined before making such a major financial decision.

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Lexington, KY 40507

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