If you’re facing a serious and unsustainable debt problem, and your creditors refuse to negotiate and instead are pushing you (or threatening to push you) to the brink or solvency, then filing for bankruptcy might be your best financial move — especially since, contrary to what some creditors would like you to believe, the moment you file all collection activity must cease. This includes aggressive or harassing phone calls, emails, letters, and any court ordered wage garnishment action as well.
However, while there are some significant benefits of filing for bankruptcy — particularly if you qualify for a chapter 7 filing, which will wipe out most of your debts — there are some important considerations, risks and disadvantages as well. And on top of your list of concerns might be how filing for bankruptcy will affect your career prospects for the next several years.
This is indeed a valid concern, because a bankruptcy will show up on your credit score (10 years for chapter 7, and 7 years for chapter 13), and a growing number of employers are checking candidate credit scores as part of their recruitment process. Yet with this being said, filing for bankruptcy is unlikely to be a vocational “albatross around your neck” for the rest of your life.
According to the Law Firm of Charles H. Huber, which has more than 30 years of experience in consumer and business bankruptcy (learn more about the firm at charleshuberlaw.com), there are few reasons why your employment road after bankruptcy might be simpler, safer and more successful than you currently fear.
The first thing to keep in mind, is that bankruptcy is surprisingly common. Each year, about 800,000 individuals and businesses file for bankruptcy — which, after all, is not a moral judgement or condemnation. It is a legal protection that is designed to enable debtors to resolve what is otherwise an unsustainable debt situation.
The second thing to keep in mind, is that a bankruptcy showing up on your credit score is not the same as, for example, having a felony in your past (which could be problematic and a deal-breaker for certain types of jobs). Many employers understand that debt can go from manageable to unmanageable very quickly; particularly if medical bills, an acrimonious divorce, emergency repairs after a natural disaster, and other factors are part of the story. The message here is that you have a good chance of explaining — and therefore explaining away — a bankruptcy on your credit score, and therefore focusing a prospective employer on what really matters: your ability to do a job and make a contribution.
The third thing to keep in mind, is that while your credit score will obviously take a hit when you file for bankruptcy (the exact amount depends primarily on your current score — the higher it is, the further it will fall), you can and should be able to build it up fairly quickly. In fact, with some smart planning that involves applying for secured credit cards and ensuring that you pay all bills on time and in full, you can likely restore your credit score into the 700s within a few years — which will put you firmly in “good to excellent” credit territory.
And the fourth thing to keep in mind — and I’ve saved the best for last — is that, ironically, your bankruptcy filing may actually serve as an advantage. Employers are generally wary of hiring employees who are heavily in debt, because it could mean they’re forced to take a second (or third) job, or in some cases, that they may be vulnerable to theft, fraud, and other illegal actions. However, as noted above, a bankruptcy filing wipes out most of your debts, which means that a prospective employer shouldn’t be concerned that you’re behind the 8-ball debt-wise (or maybe several 8-balls).
The bottom line? If you’re concerned about debt and the consequences and implications of filing, then the smartest and safest move is to speak with a qualified and experienced bankruptcy attorney. Get the facts you need to make an informed decision that puts you on the path to financial health — and peace of mind!