chadinchas

Bankruptcy and employment?

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Hi, I hope all is well with you all. I'll be glad to introduce myself and discuss my situation further when I have more time to do so, but the short version at the moment is something I'm concerned about, that I would like to get unbiased, objective viewpoints on. It's been suggested that I file for Ch. 13 bankruptcy. What affect could that have on my future job outlook (promotions, future employment opportunities, etc.)? I am a licensed social worker in the state of South Carolina. I have already had a free consultation with a bankruptcy attorney, but I would like other opinions as well, as I could clearly tell that he was also giving me his "sales pitch" to get me to hire him as an attorney. Also, how does it affect ability to get a house/apartment in the future? I currently rent a home. Thanks everyone for your time!

 

Chad

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To answer your question @chadinchas , while you are in the midst of a BK 13, employers (if they review your credit reports) may not be pleased.

 

Once a BK is discharged (either 7 or 13) most employers won't care.  And, two years post discharge, you can probably get a mortgage (although you'll probably need PMI).

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Any reason you are not considering CH7 or other options? I noticed you are renting a home. 

If you want more opinions on options other than CH13 you might want to list  your debts/assets. Listing all debts and if they are with an OC or JDB can really make a difference on possible other options. You might want to also list the date of the last payment on each account and if you have been sued or have judgments against you. 

 

Example: Just round off all amounts and do not post any personal info.

2K Cap One

4K Midland

Car Loan

 

Car   5K

Land  20K

 

The answer to your original question is yes. Many employers will avoid hiring you in the middle of a CH13. Not to mention some employers will hold any BK against you.

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Why a Chapter 13?

You don't own a home and a social worker isn't a high income profession. Seems like you'd qualify for a Chapter 7. I'd suggest another couple of consultations.

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On 4/15/2014 at 3:16 PM, Wins the Battle said:

Are you aware of the long term financial burden that a CH 13 will put on you?

 

Is it worse than the financial burden that one is typically in to even be considering bankruptcy?

On 4/15/2014 at 5:11 PM, ArtVandelay said:

Any reason you are not considering CH7 or other options? I noticed you are renting a home. 

If you want more opinions on options other than CH13 you might want to list  your debts/assets. Listing all debts and if they are with an OC or JDB can really make a difference on possible other options. You might want to also list the date of the last payment on each account and if you have been sued or have judgments against you. 

 

Example: Just round off all amounts and do not post any personal info.

2K Cap One

4K Midland

Car Loan

 

Car   5K

Land  20K

 

The answer to your original question is yes. Many employers will avoid hiring you in the middle of a CH13. Not to mention some employers will hold any BK against you.

 

On 4/17/2014 at 6:54 PM, bingo said:

Why a Chapter 13?

You don't own a home and a social worker isn't a high income profession. Seems like you'd qualify for a Chapter 7. I'd suggest another couple of consultations.

I will try to list my debts soon, I believe I have that on a file somewhere. I was going for Ch. 13 because I was under the assumption that Ch. 13, as opposed to Ch. 7, would allow you to keep your furniture, car, etc. Although I admit I'm not completely familiar with Ch. 13, I was under the understanding that they make monthly payments much more manageable than, say, a for-profit debt management program, etc. I of course need my car for my job, not to mention I just got a car because my previous one was totalled in an accident. That said, I did get a good bit of money from the equity of my old car from that accident, which has helped me catch up on bills so that I am not overdue on anything anymore. However, barring getting a really good paying 2nd job, within 2-3 months I will be struggling again, as my monthly debts exceeds my monthly income by about $845, as of the last time I updated my budgeting files I keep.

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Your reasons for filing a 13 are not valid.

SC. has some very generous bk exemptions. Looks like everything you own would be protected in a Chapter 7.

http://www.thebankruptcysite.org/exemptions/southcarolina.html

Most bk lawyers will give a free or lowcost initial consultation. SPeak with 2 or 3 and get all of your options explained.

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Do more research into CH13, specifically how they determine the amounts that you "can" afford to pay each month.

 

It might have been counterproductive for you to spend that windfall on paying creditors, but that's all water over the dam, at this moment.

 

Determine to move forward with ONE thought in mind: how best to secure your own future, and, if you have one, the future of your family.

 

I tell you this from experience. We wrote a $70K second mortgage to pay off bills (mostly from my business advertising) in 2006. If, instead of paying the debts, I'd let them go into arrears, some would have sued, some not. But I still would have been further ahead of the game by now. Any that didn't sue would now be well past SOL, and have fallen off my CRs. 

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Is it worse than the financial burden that one is typically in to even be considering bankruptcy?

 

I will try to list my debts soon, I believe I have that on a file somewhere. I was going for Ch. 13 because I was under the assumption that Ch. 13, as opposed to Ch. 7, would allow you to keep your furniture, car, etc. Although I admit I'm not completely familiar with Ch. 13, I was under the understanding that they make monthly payments much more manageable than, say, a for-profit debt management program, etc. I of course need my car for my job, not to mention I just got a car because my previous one was totalled in an accident. That said, I did get a good bit of money from the equity of my old car from that accident, which has helped me catch up on bills so that I am not overdue on anything anymore. However, barring getting a really good paying 2nd job, within 2-3 months I will be struggling again, as my monthly debts exceeds my monthly income by about $845, as of the last time I updated my budgeting files I keep.

 

Before you do anything take the advice above and speak with an attorney about CH 7. BK is not something that I take lightly, but if you are drowning in debt and can't get out don't make things worse. Many of us here have avoided filing BK, but we have traded that for a lot of hard work and lost sleep. The stress of doing this is a big price to pay in my opinion. You may or may not be the type of person that can handle fighting lawsuits for years which is where you are headed.

 

CH 13 and debt consolidation are two things that I would definitely try and avoid. I have been researching and reading post on debt for a few years now and many people just dig a deeper hole getting into these arrangements. You stated your running a deficit of 10K a year. While this might be overcome you also have to be prepared in case of any type of emergencies. Many things can pop up unexpectedly from a job loss to medical issues.

 

Speak with at least two or three more BK attorneys. You are right to be suspicious because they are trying to get your business. On the other hand when you hire the right one you are paying them to look out for your best interest. In a CH7 the person you will dealing with is a trustee. They will only care about going after you if they think you have something of value. They are not going to worry about your household and personal items for the most part. S.C. offers many exemptions and more than likely unless the trustee thinks you are hiding something he/she is going on to the next case.

 

The information below might not be up to date, but it gives you a good idea of what you can exempt. The residence exemption in SC is very generous. In my opinion you should go see the attorneys and save the money you have been paying for legal expenses. I strongly suggest everyone pay their debts when they can, but only if you can pay your way out. 

 

Homestead
  • $50,000 for your homestead. Up to $100,000 if there are multiple property owners.
Wages
  • 100 percent of earnings for personal services.
Automobiles
  • $5,000 for one motor vehicle.
Personal Property
  • Up to $4,000 for household furnishings, good, clothing, appliances, books, animals, crops and musical instruments.
  • $1,000 in jewelry.
  • $5,000 for cash and other liquid assets.
  • $1,500 for any implements, professional books or tools of the trade.
  • $5,000 for any property if you are not taking a homestead exemption.
  • 100 percent of all professionally prescribed health aids.

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Also remember, when you value your property, the valuation is based on yard sale or Goodwill price unless you have items which would sell for more than that at auction. Same goes for car, for the value, you use the KBB auction value (what a dealer would pay for the car at the auction house). Those are the values that the trustee would get for the items and they know it.

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Like @WhoCares1000 mentions above don't over value your assets. You can go to http://www.kbb.com/whats-my-car-worth/ and find the trade value of your car. Even if they use the private party value its probably going to be less than you think. Then subtract the any loans you have against it. According to what I looked up you are allowed to have at least 5,000 worth of equity. You get another 4,000 for other things in your house which I doubt the trustee is going to care about. They even allow you to have 5,000 in cash and another 5,000 miscellaneous if you don't own your home. This in addition to other available items listed above. In many states you don't have near this much room to work with.

 

The trustee probably is not going to care about anything you own. They get paid 60.00 to handle your case which is not enough in my opinion. For this reason they are either motivated to get you out of the way and allow for a discharge. Unless you have some investment accounts or something really unusual they are usually not going to waste time on a detailed investigation. This is all in my opinion based on limited research on the internet. This is why you need to hear the opinion of someone who does this for a living.  

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Do more research into CH13, specifically how they determine the amounts that you "can" afford to pay each month.

 

It might have been counterproductive for you to spend that windfall on paying creditors, but that's all water over the dam, at this moment.

 

Determine to move forward with ONE thought in mind: how best to secure your own future, and, if you have one, the future of your family.

 

I tell you this from experience. We wrote a $70K second mortgage to pay off bills (mostly from my business advertising) in 2006. If, instead of paying the debts, I'd let them go into arrears, some would have sued, some not. But I still would have been further ahead of the game by now. Any that didn't sue would now be well past SOL, and have fallen off my CRs. 

 

Actually, when I say I caught up on bills, I did catch up on credit card payments I was behind on, but most of it went to my overdue electric and water bills. I do not currently have any dependents or significant other who are in any way dependent on me, so my income is actually fairly decent for a single guy with no dependents ($33,500/year, although I just got this job in January). The problem is that it won't be until October 2015 that my debts will fall below my current monthly net income. And that's IF nothing goes wrong or is unexpected during that time, and IF I'm able to continue with my current hardship forbearance with my student loans.

 

Before you do anything take the advice above and speak with an attorney about CH 7. BK is not something that I take lightly, but if you are drowning in debt and can't get out don't make things worse. Many of us here have avoided filing BK, but we have traded that for a lot of hard work and lost sleep. The stress of doing this is a big price to pay in my opinion. You may or may not be the type of person that can handle fighting lawsuits for years which is where you are headed.

 

CH 13 and debt consolidation are two things that I would definitely try and avoid. I have been researching and reading post on debt for a few years now and many people just dig a deeper hole getting into these arrangements. You stated your running a deficit of 10K a year. While this might be overcome you also have to be prepared in case of any type of emergencies. Many things can pop up unexpectedly from a job loss to medical issues.

 

Speak with at least two or three more BK attorneys. You are right to be suspicious because they are trying to get your business. On the other hand when you hire the right one you are paying them to look out for your best interest. In a CH7 the person you will dealing with is a trustee. They will only care about going after you if they think you have something of value. They are not going to worry about your household and personal items for the most part. S.C. offers many exemptions and more than likely unless the trustee thinks you are hiding something he/she is going on to the next case.

 

The information below might not be up to date, but it gives you a good idea of what you can exempt. The residence exemption in SC is very generous. In my opinion you should go see the attorneys and save the money you have been paying for legal expenses. I strongly suggest everyone pay their debts when they can, but only if you can pay your way out. 

 

Homestead
  • $50,000 for your homestead. Up to $100,000 if there are multiple property owners.
Wages
  • 100 percent of earnings for personal services.
Automobiles
  • $5,000 for one motor vehicle.
Personal Property
  • Up to $4,000 for household furnishings, good, clothing, appliances, books, animals, crops and musical instruments.
  • $1,000 in jewelry.
  • $5,000 for cash and other liquid assets.
  • $1,500 for any implements, professional books or tools of the trade.
  • $5,000 for any property if you are not taking a homestead exemption.
  • 100 percent of all professionally prescribed health aids.

 

Thank you for that break down. I have made an appointment with two other local bankruptcy attorneys for second and third opinions.

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Just FYI - I don't think potential employers can check your credit unless you are applying for a job that involves large amounts of cash handling or other forms of intense financial activity.  There are federal rules enacted in 2012, I think. 

 

And if they do check your credit, they have to notify you, and there are serious legal ramifications if they do so without going through all of the hoops. 

 

Here in Oregon we have passed a bill that basically doesn't allow them to check your credit at all, unless the job falls under exceptions for certain financial institutions.  You should check your state - I think there was a pending bill just like Oregon's but I'm not sure it made it out of the legislature.  I considered this fact when choosing to file Chapter 7 in February.  Plus I work in a fairly warm and fuzzy non-profit industry which is doubtlessly full of people with less-than-perfect credit :-)

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I think the best advice if they pull your CR would be to tell them up front what problems you have had and why. The rules no longer apply to just certain jobs, because some employers pull credit on every applicant. 

 

http://www.consumer.ftc.gov/articles/0157-employment-background-checks

 

As far as I know its legal for any potential employer to use your credit report when considering you for employment. All they must do is get your permission to pull your CR and then let you know why they made their decision. You are correct that some state laws have been enacted to stop this discrimination. The problem is that they may give you another reason even if it was based on your credit history. That may be something very difficult to prove if challenged. 

 

http://www.ncsl.org/research/financial-services-and-commerce/use-of-credit-info-in-employ-2013-legis.aspx

 

 

The big problem I have is the "extra employment" credit report that credit bureaus offer companies. If you are applying for a job with a salary of over 75,000 the usual negative reporting periods may not apply. 

Some exceptions to the 7-10 year rule exist. If, for example, a credit report is going to be used for a credit transaction that will involve an amount above $150,000, the underwriting of life insurance with a value above $150,000, or for employment screening where the job would pay an annual salary of at least $75,000 then the 7-10 year rules do not apply. That means your 25-year-old bankruptcy or your 15-year-old late payments could still show up on your credit reports without the credit bureau violating the Fair Credit Reporting Act.

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As requested, here are my bills, etc. - not counting rent and utilities:

 

online loan 1: I owe 2680.
online loan 2: remaining balance is $1352.11
online loan 3: remaining balance 177.50
online loan 4: remaining balance $1124.15
online loan 5: remaining balance $1060.54
online loan 6:remaining balance approximately $930
Best Buy: $1500
Rooms to Go: $3500
Wells Fargo:$3268
Walmart credit card: $4100
 
My car was bought for approximately $14,000 at CarMax on 4/15 (I know that's probably higher than I should have gone, but I was focusing more on gas mileage and efficiency, as I drive A LOT for work), with my monthly payments being $338. My car insurance will be going up to about $345. I do also have one small $300 Credit One credit card that I use solely for work/business expenses, and pay off whenever I get those reimbursement checks from work.

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I'm guessing those listed as online loans are credit cards. If so are they still with the OCs?

 

Are any of those loans secured such as the Rooms to Go with furniture?

 

How much is the current value of the car? www.kbb.com (private party value) How much do you owe on the car?

 

Is that $345. for car insurance per month or every 6 months?

 

How much is your rent, utilities, groceries etc. per month?

 

How much is your income per month?

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I'm guessing those listed as online loans are credit cards. If so are they still with the OCs?

 

Are any of those loans secured such as the Rooms to Go with furniture?

 

How much is the current value of the car? www.kbb.com (private party value) How much do you owe on the car?

 

Is that $345. for car insurance per month or every 6 months?

 

How much is your rent, utilities, groceries etc. per month?

 

How much is your income per month?

 

 

 

Those are payday loans/installment loans. I fell into *that* trap. :(

 

The only secured loans I have are the Rooms to Go furniture and the car.

 

If I'm doing the math right, the value on kbb.com is $11,405. May will be my first payment, which is $338/month for 72 months. So about 24,336. Got it from CarMax.

 

the $345 is per month.

 

Rent is $1250, electricity is about 170, water, about 100, TV 52, internet 56, groceries, I'm single so I can probably swing it on about $150 a month or less, as I'm pretty frugal

 

Income: 1937.26 after taxes + 510 one roommate pays me +450 the other roommate pays me (I then pay the landlord) = 2897.26

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Excluding the car, you have about $15K worth of debt.

I gotta say- on $1937/month net, how are you going to support yourself post bk? Rent, car payment and, insurance is about equal to your net. I'm of the school of thought that you leave bk in better shape than you entered. It's hard to see how you'll accomplish that with your income and that car payment plus, insurance.

You gotta start making better choices. Noway financing a depreciating asset for 72 is a winning proposition and that insurance is outrageous. Have you shooped around for cheaper coverage.

I'm of the opinion that,the only way bk will work for you is, let the car go and buy a clunker and a few months post bk finance something that is reasonable as to price and length of financing.

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Well, for one, you're not including the income I get from my roommates, who pay me, and then I pay the land lord. Their rent payments to me help contribute to the rent, utilities, etc.  That's the whole point of roommates. Also, I didn't even list mileage reimbursement - Every couple of week, I get reimbursed a percentage of mileage that I drive during that pay period. How much I get paid for it depends on how many miles I drive during the time between when I submit my mileage forms and my supervisor approves it. For instance, on the next upcoming mileage reimbursement check, I'll be getting $125. The time before that was $40. Because it's so fluctuating, I don't even count that into my regular budgeting.  

 

As for the car, I can't even begin to estimate how many miles a month I drive. I'm a social worker who does home visits, sometimes an hour or more away from the office, multiple times a week. If I had a clunker, yes, the monthly payments would be cheaper, but the gas and repair bills would make up for that. Also, I'm in the process of applying for a 2nd job that would potentially be flexible with my oncall schedule with my main place of employment. And while I admit my part in the problem, some of it is not my choices. Not everyone who faces bankruptcy does so completely of their own doing. It's more complex than that. Also, the car insurance is due to a couple of recent accidents. That will go down as I improve my driving and go longer without an accident.

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Those are payday loans/installment loans. I fell into *that* trap. :(

 

The only secured loans I have are the Rooms to Go furniture and the car.

 

If I'm doing the math right, the value on kbb.com is $11,405. May will be my first payment, which is $338/month for 72 months. So about 24,336. Got it from CarMax.

 

the $345 is per month.

 

Rent is $1250, electricity is about 170, water, about 100, TV 52, internet 56, groceries, I'm single so I can probably swing it on about $150 a month or less, as I'm pretty frugal

 

Income: 1937.26 after taxes + 510 one roommate pays me +450 the other roommate pays me (I then pay the landlord) = 2897.26

 

Your payoff on the car is probably around 14,000. - 15,000., so your equity is negative. You will need to ask the attorney if you can reaffirm the loan. Since the loan has just started I'm not sure how that will work. You need to make the case that you need this car to remain employed. As for the furniture I don't have a clue. I know the lender will probably not want it back, so maybe you can do a reaffirmation lowering the principle and/or interest rate.

 

Everything else looks like its unsecured, so you should be OK there. You will need to work with the attorney on how you structure your income. I'm guessing the attorney will want to only list your job income and your portion of the rent. Based on the S.C. laws you should qualify for Chapter 7. You are definitely not a target the trustee will want to waste any time on. 

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Well, for one, you're not including the income I get from my roommates, who pay me, and then I pay the land lord. Their rent payments to me help contribute to the rent, utilities, etc.  That's the whole point of roommates. Also, I didn't even list mileage reimbursement - Every couple of week, I get reimbursed a percentage of mileage that I drive during that pay period. How much I get paid for it depends on how many miles I drive during the time between when I submit my mileage forms and my supervisor approves it. For instance, on the next upcoming mileage reimbursement check, I'll be getting $125. The time before that was $40. Because it's so fluctuating, I don't even count that into my regular budgeting.  

 

As for the car, I can't even begin to estimate how many miles a month I drive. I'm a social worker who does home visits, sometimes an hour or more away from the office, multiple times a week. If I had a clunker, yes, the monthly payments would be cheaper, but the gas and repair bills would make up for that. Also, I'm in the process of applying for a 2nd job that would potentially be flexible with my oncall schedule with my main place of employment. And while I admit my part in the problem, some of it is not my choices. Not everyone who faces bankruptcy does so completely of their own doing. It's more complex than that. Also, the car insurance is due to a couple of recent accidents. That will go down as I improve my driving and go longer without an accident.

I don't understand why you think money you get from roomates is really income since you turn around and pay the LL nearly $3K.

I'm not being judmental. Heck, I bk'ed $71K worth of cc debt in 05. I had no real excuses for running up that much debt except, I had "champagne taste with a beer budget"

But, I had a plan before I filed to be sure my problems were fixed. That's what you need to do. You can rationalize all you like but, with your portion of the rent plus, carpayment and insurance you're spending your takehome pay. And, you haven't even put gas in the car, paid utilities, bought food and all the other things people have to buy.

I'll just say again,once discharged from bk, it won't take long before you need another payday loan.

Unless you can realistically raise your income, you got a car and a home you can't afford.

You may want to think about ditching the rental and, either moving back home for awhile or, renting a small studio/efficiency apt.

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@bingo: I assume that the entire rent is $1250--so his net rent is about $400.

That's not what he posted in #18.

Income: 1937.26 after taxes + 510 one roommate pays me +450 the other roommate pays me (I then pay the landlord) = 2897.26

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For your balance sheet all that will be considered income is your salary from your job. You attorney will tell you if you need to list the total rent or your share. 

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