Friday, December 31, 2010

Bankruptcy and Employment Discrimination

You may have heard a lot lately about bankruptcy and employment discrimination. These days, debtors are understandably concerned about the effect that bankruptcy has on their ability to keep their current job and/or the ability to be hired for a new one. Here's the lowdown regarding bankruptcy and jobs.

Under section 525 of the 2005 bankruptcy code, employers may not terminate an employee for filing bankruptcy. They can also not factor in bankruptcies when it comes to advancements or promotions. Furthermore it is illegal for government agency hiring someone for a public job to consider an applicant's bankruptcy during the hiring process. However, there are unfortunately no laws to protect an applicant from this kind of bankruptcy and employment discrimination in the private sector.

Recently, courts have upheld that private employers are indeed able to not hire employees based on their bankruptcy history. I caution anyone who might make the decision to file bankruptcy or not based solely on this factor. If your credit history is really bad, a prospective employer is just as likely to not hire you. A bankruptcy probably isn't going to make the difference between getting a job or not if your credit history is crappy.

Below is section 525 of title 11 of the 2005 bankruptcy code.

Title 11 U.S. Code § 525, Protection against discriminatory treatment

(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes,” approved July 12, 1943, a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt—
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

(1) A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt has been associated, because the debtor or bankrupt is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of a case under this title or during the pendency of the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
(2) In this section, “student loan program” means any program operated under title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.

Wednesday, December 29, 2010

How Often Can I File for Bankruptcy?

How often can I file for Bankruptcy? That's the question I read being discussed this morning. A debtor has paid his lawyer only to find that he is not going to be able to file a chapter 7 bankruptcy due to insufficient time passing between bankruptcy filings.

So how often can you file for bankruptcy? I figured that some of you might like to know the answer to this so I'll give you the nutshell version.

A Chapter 7 Bankruptcy stays on your credit report for 10 years (Chapter 13 for 7 years) but remains on your public record for 20 years. While these are issues that should be taken into consideration when deciding whether or not to file for bankruptcy, they have no bearing on how often you can file bankruptcy and receive a discharge.

The 2005 bankruptcy laws established that a debtor cannot obtain a discharge in a Chapter 7 case if the debtor obtained a discharge in a Chapter 7 case filed within the past 8 years. Or 6 years between Chapter 13 cases. The clock starts ticking at the time of filing, not the time of the discharge.

For the best advice, "How often can I file for bankruptcy?" is a question for your bankruptcy attorney. There are some exceptions (in chapter 13 cases) and there are some additional rules. Also, there may be other circumstances unique to your case that affect your filing. I am not a lawyer.

I wish you the best 2011 possible!

ep

Friday, December 24, 2010

Definition of Insolvency

What is insolvency? That's what I got asked yesterday...New Years Day...it makes me sad but I also found it encouraging that a friend of mine wants to finally put her financial house in order. She wanted me to define insolvent because she was trying to figure out if she's insolvent or not.

You may be wondering if you are insolvent. I'm thinking that if you have to ask you probably are but according to dictionary.com, the definition of insolvency is the following:

in·sol·ven·cy   
Pronounced [in-sol-vuhn-see]
–noun
the condition of being insolvent; bankruptcy.


Well that's not very helpful, is it? Okay, let's go to the definition of insolvent then. The definition of insolvent according to dictionary.com is:

in·sol·vent   
Pronounced [in-sol-vuhnt]
–adjective
1. not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.
2. pertaining to bankrupt persons or bankruptcy.
–noun
3. a person who is insolvent.


Still not very clear, is it? Okay, well if you are wondering if you are insolvent or not for the purposes of filing bankruptcy I say that you are insolvent if you are unable to pay your debts. If your debts exceed your income and your assets then you are insolvent.

Problem is, a lot of people don't know whether they are insolvent or not because they don't want to take a good, hard look at their financial situation. I know it hurts. But you can gather all of your information and a good bankruptcy attorney will easily be able to tell you whether you are insolvent or not. You may not be, but if you are, that is why bankruptcy exists. To give you a fresh start.

I wish nothing but the best of luck to you in 2011 and beyond.

ep

Monday, December 20, 2010

Bankruptcy Solutions

Lots of people today are looking for bankruptcy solutions. I would argue that there really are no bankruptcy solutions. The word solution implies that there is some remedy which does not impose side effects...a magic wand, an attractive genie, some paranormal activity with regards to your finances. Difficult to prove.

However, insolvency is not the end of the world in most cases. Take corrective action and you can turn your life around.

The recent recession and individual circumstances have caused more and more people to become insolvent. If you are in over your financial head, there are no bankruptcy solutions short of winning the lottery this second in time. The sooner you realize that there is going to be no miracle cure to disolving your debt, the better off you'll be.

To some, bankruptcy is the solution. It then becomes a question of whether to file a chapter 7 or a chapter 13. A bankruptcy attorney will be able to tell you which chapter is right for you after hearing the details or your case.

Other options that some might consider bankruptcy solutions are actually bankruptcy alternatives. These could include consumer credit counseling, debt settlement, or debt consolidation loans.

There really aren't a whole lot of other options. And you need to be careful when making decisions. Not all debt settlement services are reputable and there are things to take into consideration when selecting a bankruptcy attorney. Please see my tips below for selecting the right one and as always Best of Luck to You!

Tips For Selecting The Right Bankruptcy Attorney

Thursday, December 16, 2010

What To Do About Creditor Harrassment

Before I filed for bankruptcy, I was being harrassed by creditors like you wouldn't believe. Creditor harrassment is very real. There are laws governing the debt collecting process, especially in California and creditors break them all the time.

I am going to get into the FDCPA (Fair Debt Collection Practices Act) eventually but in the meantime, you can read what one California lawyer has to say about Creditor Harrassment.

Bankruptcy Code Time Machine

For anyone interested in bankruptcy law, I just found this really cool bankruptcy tool. It is called the Bankruptcy Code Time Machine and it allows you to look up the way the bankruptcy code was written on any given date back to January of 1980.

This would be especially helpful for those wanting to know the differences in the bankruptcy laws prior to 2005. Access it through: BankrLaw

Have at it!

Sunday, December 12, 2010

Why Bankruptcy? Reasons For Bankruptcy Continued

It occurred to me, after writing my last post, Reasons For Bankruptcy, that while I may have addressed the questions Why bankruptcy? and What are the reasons for bankruptcy?, I may not have answered the question: For what reasons is a person granted a bankruptcy discharge?

If you are reading this, you already likely know the reasons that people file for bankruptcy. At least you know why you are considering filing bankruptcy. What you may be looking for are the reasons why bankruptcy discharges are granted.

Am I right? If so, keep reading....there are some bankruptcy myths that you should know about.

First of all, you don't need a "valid" reason for bankruptcy. You can either pay back some or all of your debts or you can't. Unless you are committing bankruptcy fraud (that's a topic for another post and one that you should discuss with an attorney), there are no "invalid" reasons for bankruptcy. For example, you may have lost your job but even if you QUIT your last job, you can still file for bankruptcy.

Every situation is different, of course, and you should discuss yours with a bankruptcy attorney, which I am not. However, in most cases, the court will only look at the bottom line and see if you pass a means test. The bankruptcy means test is exactly what it sounds like. It is basically a six month look back at your finances and assets and it will determine if you have the means to pay back some or all of your debts. Then you will do so according to a court order.

In a chapter 7 bankruptcy (which not everyone qualifies for), all of your debts are discharged but your assets (beyond an allowable exemption which varies from state to state) may be seized and sold to pay your creditors.

In a chapter 13 bankruptcy, you are required to pay back some or all of your debts and put on a payment schedule for up to five years.

Common Bankruptcy Myths include:

· The 2005 bankruptcy laws made it impossible to file for bankruptcy
· You can't file for bankruptcy if you have quit your job
· Your credit rating will be ruined if you file bankruptcy

Oh, let me address that last one really quick. Sure, bankruptcy does not help your credit rating. But for the average filer, the credit rating is already shot. Bankruptcy, believe it or not, will not make this worse in many cases. Again, always talk to a bankruptcy attorney before acting upon any advice you find on the internet. Best of luck to you!