Filing Bankruptcy After a Job Loss

A job loss is often a major reason for a person’s decision to file bankruptcy, and, in particular, to file for Chapter 7 protection.  However, there are some steps that you should follow prior to filing bankruptcy due to a job loss.

Attend Pre-Bankruptcy Counseling

Before filing for any type of bankruptcy, you must attend pre-bankruptcy counseling.  This mandatory credit counseling session must occur with a debt counseling agency that is approved by the U.S. Bankruptcy Trustee.  While debt counseling agencies may charge a fee for their services, you are entitled to a credit counseling session for the purposes of filing bankruptcy at no or low cost.

Avoid Spending Retirement Before Filing Bankruptcy

Some people believe that they should spend down all of their assets before filing bankruptcy, in order to minimize their debts and/or assets.  Most retirement accounts, however, are exempt from bankruptcy proceedings.  This means that your retirement accounts are not subject to liquidation and distribution by the U.S. Bankruptcy Trustee in order to pay your debts.  Therefore, you should avoid spending retirement before filing bankruptcy, as you will be able to retain those accounts for your future security.

Impact of Bankruptcy on Future Employment

One common concern about filing bankruptcy is its impact on future employment.  While bankruptcy definitely has a negative impact on your credit score, it may or may not negatively affect your future employment.  For some professions, the impact of bankruptcy on future employment may be a serious concern, if creditworthiness is an issue; for other jobs, however, employers typically do not explore your credit history.

Seek Legal Assistance with Your Bankruptcy

In order to adequately address your concerns regarding filing bankruptcy and its impact on future employment, be sure to consult an experienced attorney for assistance.  An attorney will be able to best advise you regarding your bankruptcy options, as well as educate about the implications of bankruptcy.