Are There Consequences to Filing for Bankruptcy? An Overview of “What Comes After”

Drowning in debtWhen clients come to our office to discuss their bankruptcy options, they often have many questions such as “Should I file Chapter 7 or Chapter 13” and “Can I keep my house and my car?”. These are excellent questions and should absolutely be answered and taken into account when forming a successful bankruptcy strategy.

However, many Georgians do not think about what comes after they file bankruptcy – short of how much of their debt may be discharged. But it is very important to consider the possible repercussions of filing for bankruptcy as these considerations should also be taken into account when creating a bankruptcy plan.

Consequence #1: Your Credit Score

Normally if a person does consider what happens in the life after bankruptcy, he/she only thinks about one thing: his/her credit score. Depending on your specific pre-bankruptcy circumstances, your credit score could go up, go down, or remain largely unaffected after your bankruptcy. For example, if your credit score was pretty low before filing for bankruptcy (due to your high debt to income ratio) your score will likely not be affected by the bankruptcy filing. On the other hand, if you had a relatively high score pre-bankruptcy, then your score may go down after you file your case. If you are concerned about your credit score, make sure to discuss this issue with your bankruptcy attorney before filing your case as there are other debt negotiation options to may be available to you.

Consequence #2: Post-Bankruptcy Discrimination

Bankruptcy cases are public record, which means that if someone wanted to look up your name in the bankruptcy case register they would be able to see that you had filed a case. Regardless of whether your employer is a government entity or a private sector business, your employer cannot fire you on the ground that you filed a bankruptcy case. Importantly, your employer also cannot discriminate against you because you filed for bankruptcy. This means that your employer cannot arbitrarily reduce your pay or significantly change your job responsibilities or seniority just because you filed for bankruptcy. (But please note that if you have committed any work-related acts that would justify your employer taking these actions against you, the fact that you filed for bankruptcy will not protect you).

Consequence #3: Obtaining a Security Clearance

If you are seeking new employment after you file your bankruptcy case, you may be required to obtain a security clearance. Security clearances are required for employment positions with many government agencies, such as the FBI or CIA, as well as for job opportunities with government contractors. Since people with large amounts of debts may be more easily blackmailed or manipulated, the fact that you filed for bankruptcy and discharged your debts might actually works to your advantage when seeking a security clearance after filing your case.

Consequence #4: Applying for Jobs; Good news and Bad news

The good news is that local, state, and federal government agencies are prohibited from considering your bankruptcy case when they evaluate you for an employment position. The bad news is that there is no prohibition that stops private employers from considering the bankruptcy in your past when evaluation you for an employment position.

If you would like to discuss more consequences of filing for bankruptcy, contact our office today to speak to an experienced attorney about your case. Call 404-913-1529. We look forward to working with you!