Bankruptcy has consequences, and most of those offering Bankruptcy Advice recommend that filing bankruptcy should be the choice of last resort. However, when creditors are pursuing legal action and it’s impossible to sleep at night, bankruptcy may be unavoidable. A great many people have gone through the process and successfully come out the other side into a better life.
When considering exactly what is bankruptcy, weigh the pros and cons. Most debts will be discharged, offering a sense of relief that hasn’t been felt for quite some time. On the other hand, there are consequences which will affect some people greatly and others not nearly as much.
Job Hunting after bankruptcy will be More Difficult
It will be necessary to defend the decision to declare bankruptcy to a potential employer. It’s common for employers to run credit checks, so it would be difficult to conceal the fact. If the job involves accounting, finance, handling cash or valuable merchandise, bankruptcy will complicate a job hunt.
Employers are accustomed to seeing bad credit reports, so this is not an automatic disqualification but is a handicap. How much of a handicap really depends upon the job. For many jobs, a bankruptcy would be irrelevant. However, if a security clearance is needed or the job would have a financial impact on the company, it would be wise to look for a job in another area or industry.
Before job hunting, do your own background check and take a look at what a potential employer would see. Have a short, regretful explanation ready for potential employers and then redirect the conversation to your strengths. The conversation could proceed along these lines. “I’m not an irresponsible person. My poor credit came about because of divorce, an accident, unemployment, etc. I hope that you’ll seriously consider that I have considerable experience in …. My former employer will give me an excellent reference if you call.”
Some Professional Licenses will be Canceled or Restricted
Holders of professional licenses should check with the appropriate agency as to how bankruptcy will affect their licenses. Builder’s licenses, for example, will be canceled while an electrician or plumber may be able to continue to work with a restricted license. Someone operating a business may or may not be able to continue, depending on the type of business and other factors.
Before becoming bankrupt, anyone holding a professional license should consult an expert for bankruptcy advice on their employment consequences.
It will be difficult to get credit for five years.
Household Goods and Other Assets
Household goods and personal items like TVs and computers will be kept. A home, vehicles worth over $7,500, and other valuable assets will be lost.
It will be necessary to review post-bankruptcy income limits and other issues with a financial counselor to see what will be applicable. Some debts, such as child support, will still need to be paid. There is life after bankruptcy, so make it a good one!