Discover the Positive Consequences of Filing for Bankruptcy

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Positive Consequences of BankruptcyThe word “consequences” is almost always associated with negative effects and outcomes, such as losing money, feeling pain, or enduring something unfortunate and regrettable.

However, in life there are positive consequences as well. For example, people who follow their doctor’s advice and achieve a health body-mass index enjoy consequences that include more energy, stronger bones, and probably a longer life as well. Similarly, drivers who follow the rules and laws of the road are more likely to enjoy the positive consequence of safely getting from point A to point B (and avoiding a costly traffic ticket).

And indeed, there are immediate positive consequences of filing for bankruptcy that do not get talked about much, but are nevertheless relevant when people weigh the pros and cons of taking this serious — but sometimes necessary — financial step. These include:

  • It’s a pivotal and potentially life-changing starting point to regain control over debt.

For many people, the most debilitating and terrifying aspect of being in serious and sustained debt is that they feel powerless to do anything. They are in a hole that gets deeper and darker by the day. Aside from the obvious financial damage this does, the psychological and emotional impact is severe — and for many people, it is traumatic.

Filing for bankruptcy will NOT instantly make financial problems go away. However, it does represent a definitive — and indeed, uplifting —starting point to regain control over debt. As the old saying goes, a journey of 1,000 miles starts with a single step. For some people, filing for bankruptcy is the step they need to take, in the direction they need to go.

What’s more, people who file for bankruptcy must complete a credit counseling course within 45 days of filing. This course, which can be taken in-person or online, provides sound, practical advice that can help people get — and stay — out of unhealthy and debilitating debt for the rest of their lives.

  • It puts an immediate end to collection action.

Many people who are deep in debt are terrified to hear the phone ring or open their mail — because they have been traumatized by endless, and often illicit aggressive collection action (illicit in that lenders/third parties hired on their behalf must follow certain laws, but frankly, many of do not because they know the harder they push, the more likely they are to “psychologically break” a debtor and get a payment).

However, the instant that a debtor files for bankruptcy, all collection action must stop. This includes all phone calls, emails, text messages, and any wage garnishments that have been enacted per court order (the paperwork on this can take a couple of weeks, but the wage garnishment will effectively cease on the date of the filing, and any clawed-back salary will be paid out).

Learn More

Obviously, filing for bankruptcy is a serious, life-changing step, and one that cannot be taken lightly. However, while the road ahead will be challenging, people who opt for bankruptcy can look forward to some immediate relief: financially, as well as psychologically and emotionally.

To learn more, contact the Law Office of Charles H. Huber today.

Can You Get Garnished Wages Back After Filing for Bankruptcy?

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Bankruptcy 2While in itself it is not (and should not) be the primary reason why you should file for bankruptcy — since this determination must ultimately be based on a comprehensive analysis of what is in your best long-term financial interest — the fact remains that one of the biggest advantages of filing is that all collection action against you must stop immediately. This includes all calls, letters and emails from creditors (or collection agencies on their behalf), and very importantly, it also means that wage garnishments musts cease and you may be entitled to recover all or some of these funds. We discuss this further. First, let us look at how wage garnishment works, and what happens if and when you file for bankruptcy.

How Wage Garnishment Works

Unless your debt in question is a student loan, taxes or child support, generally creditors cannot garnish your wages without first filing a lawsuit in court and securing a money judgement. If such a judgement is obtained, it is forwarded to your employer, who is then legally obligated to claw back a portion of wages for each pay period and remit it to the creditor.

Note that employers have no discretion in this regard and cannot deviate from the instructions laid out in the judgement, regardless of how much they may sympathize with your financial situation (i.e. you may be indebted because of massive medical bills, an acrimonious divorce, emergency repair bills to your home, etc.).

What Happens When You File for Chapter 7 Bankruptcy

If and when you file for chapter 7 bankruptcy, you will automatically and instantly be protected by what the court refers to as an automatic stay. This essentially bars creditors from taking any collection action during your bankruptcy case proceedings.

The court will inform your employer (along with all other listed creditors) about the bankruptcy filing and automatic stay and will instruct that all collection action — including wage garnishment — cease. Since this process is can take a few weeks, you can if you wish send a copy of the bankruptcy filing to your employer to expedite things. Any wages that were clawed back after the date the automatic stay came into effect will be released to you.

Recovering Garnished Wages

It may also be possible to recover garnished wages that were clawed back within 90 days prior to the bankruptcy filing/automatic stay. The amount in question must be more than $600, you must have enough exemptions to cover the funds, and the court-appointed Bankruptcy Trustee must not attempt to avoid the transfer.

If all of these apply, then you may be entitled to file a lawsuit against the garnishing creditor (i.e. your employer) as part of an adversary proceeding. Being represented by an experienced bankruptcy attorney is essential here. Many people attempt to represent themselves (“Pro Se”) and realize very quickly that it is a much more complex process than they realized. The courts also have very little tolerance (read: none) for litigants who do not file the correct paperwork or are ignorant of laws, proceedings and protocols.

Learn More

If your wages are currently being garnished, and you want to learn more about the process of filing for bankruptcy — potentially recovering some or all of these clawed back funds — contact the Law Office of Charles H. Huber today.

Will You be Able to Rent an Apartment After Bankruptcy?

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BankruptcyThe short answer to the question “will you be able to rent an apartment after bankruptcy?” is yes, you will.

Now, for the longer explanation, let us start with this: bankruptcy is surprisingly common, with nearly 800,000 individuals and businesses filing for the 12-month period ending December 31, 2016. More than half of all filing were chapter 7, and more than a third were non-business chapter 13 filings. Additionally, it’s estimated that 1.21-1.25 million Americans will file for bankruptcy this year. As such, be assured that you are certainly not alone, and that you have nothing to feel ashamed about. Bankruptcy is a very loaded term that carries a lot of emotional baggage, but it is technically a legal process.

With respect to renting an apartment after bankruptcy: yes, it is true that most landlords will run a credit check, and as such a bankruptcy filing will show up. However, many landlords are more interested in a prospective tenant’s employment history and status, as well as their current (vs. their former) debt situation. This is especially the case in markets where supply of rental housing exceeds demand, and as such prospective tenants — with and without a bankruptcy in their credit history — have more leverage.

Below are seven practical tips that can the chances that your rental application will be approved post-bankruptcy:

  • Be proactive and explain to a prospective landlord the context and mitigating factors related to your bankruptcy filing.

For example, you may have been overwhelmed — as millions of people each year are — by skyrocketing medical bills, or you may have endured an acrimonious and drawn-out divorce or custody battle. Or even if you simply lost control of spending, explaining this can demonstrate that you have re-organized your financial life, and have consistently met your financial obligations since filing.

  • Focus on your employment history and job security.

As noted above, focus on your employment history and (if applicable) your current job security. For example, if you are in a field where demand for your skills is strong (e.g. nursing, cyber security, etc.), then this can only bolster your chances of approval.

  • Offer a larger security deposit.

If possible (and it frankly may not be if your bankruptcy filing was recent and you are rebuilding your savings), then it may help if you offer a larger security deposit.

  • Provide references.

Just like applying for a job, providing references to a prospective landlord can make a significant difference in your favor. These can include former and current employers, and ideally former landlords as well that can vouch for your good conduct (financial and otherwise) as a tenant.

  • Target your search to private property owners.

Some private property owners have more flexibility in their decision-making compared to property management companies.

  • Get a co-signer.

If you cannot find a suitable rental on your own, then if possible, ask someone with good credit to co-sign your agreement.

  • Look for “no credit check” rentals.

Finally, if you are unsuccessful with all of the above, then you may need to focus on properties that are advertised as “no credit check” rentals. Often, these are located around colleges and universities (since they cater to students who do not have much/any credit history as yet).

Learn More

Filing for bankruptcy is a major step, but it does not mean that you will be unable to rent an apartment, get a credit card, get a job, obtain a mortgage, lease a car, and so on. The key thing is to have the right plan, mindset and support system to carry it out.

To learn more about potentially restructuring your debts through bankruptcy, and for other questions related to life before, during and after a filing, contact the Law Office of Charles H. Huber today.

How Will Filing for Chapter 7 Bankruptcy Impact Your Job Search & Career?

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Bankruptcy Button in Flat Design with Long Shadows on Turquoise Background.-728159-editedIf you are considering or have been advised to file for Chapter 7 bankruptcy protection, then you are already aware — or are currently in the process of researching — the long-term consequences and implications of this decision. This article focuses on a key aspect of your future that may be affected: your job search and career.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy (a.k.a. “liquidation bankruptcy”) is the most common bankruptcy filing type in the country. If your petition is successful, the court will appoint a Bankruptcy Trustee to liquidate 100 percent of your non-exempt assets and use the sale proceeds to pay creditors an agreed upon amount. What’s more, the moment you file a petition, all creditors must seize contacting you in any manner, and all collection activity must stop as well. Under certain conditions, you may also be entitled to recover any wage garnishments that took place in the 90 days immediately prior to the bankruptcy filing.

Impact on Your Job Search/Career

It is not possible to predict how, and if so to what extent, filing for chapter 7 bankruptcy will impact your job search or overall career path. With this being said, there are some facts that can be definitively stated:  

  • No employer in either the public of private sector may terminate your employment because you filed for bankruptcy. 
  • No employer in either the public or private sector can discriminate against you in any way, explicitly or implicitly, because you filed for bankruptcy. This can include, but is not limited to, reducing your salary, denying you a promotion that you would have otherwise obtained, demoting you to a lower position (even if there is no reduction in salary or benefits), or taking away certain responsibilities or tasks (e.g. making bank deposits, auditing expenses, etc.).
  • No public sector agency can automatically deny your job application because you filed for bankruptcy.
  • An employer in the private sector may reject your job application if a credit check reveals a past bankruptcy, and that fact is material to the tasks/activities of the job.

Additional Insights

Here are some additional job search and career-related insights to keep in mind as you contemplate filing for chapter 7 bankruptcy:

  • The older your bankruptcy filing, the less likely it will be perceived as a deal-breaker by a prospective employer.
  • It is unlikely that your current employer will find out about your bankruptcy filing (through this might be discovered by your boss if the payroll department receives a notification to cease any wage garnishment action that a creditor launched prior to your filing).
  • Being proactive with a prospective employer and explaining the context of your bankruptcy filing (e.g. acrimonious divorce, massive medical/caregiver bills, emergency home repairs after a disaster etc.) can turn this into a non-issue. Being in debt is certainly not illegal or immoral.

A Final Word

One of the most important things to keep in mind — and also one of the most inspiring — is that rather than being an albatross around your neck that repels current and future employers, filing for bankruptcy can actually increase your employability, because it means you are not sinking in debt.

Indeed, most employers are much more concerned about current/prospective employees who are in deep debt, because it means they may have to secure additional employment (i.e. get a second job, which most employers frown upon and some even forbid). Employers may also be concerned that a deeply indebted employee might be more vulnerable to theft, corruption, fraud or bribery.

Learn More

To learn more about the details and implications of filing for chapter 7 bankruptcy, including how it might affect various areas of your life — including but not limited to your job search and career — contact the Law Office of Charles H. Huber today.

Will Filing for Bankruptcy Eliminate Your Medical Debt?

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bankruptcy The problem of excessive and unsustainable medical debt in the U.S. isn’t actually a problem: it’s a full-blown epidemic. A study by the Centers for Disease Control and Prevention (CDC) found that 1 in 3 Americans are burdened by medical bills. And research by NerdWallet Health revealed that medical debt has now earned the dubious distinction of being the number one cause of bankruptcy filings in the nation.

If you’re anxiously watching medical bills pile up — and feeling the heat from increasingly aggressive hospital, doctor and healthcare network collection tactics — then filing for bankruptcy might be a viable option. This is because medical bills are viewed by the courts as general unsecured debts. This is not the case with some other debts, such as child support, alimony, restitution due to a criminal conviction, or student loans. These will remain on the books even after filing for bankruptcy (some people may be able to get relief from their student loan debts if they can demonstrate financial hardship, but that is part of a separate filing).