Will My Employer Know If I File Bankruptcy

will my employer know if i file chapter

will my employer know if I file chapter

If I file Bankruptcy can I lose my job

Clients often ask whether their job may be in danger if they file bankruptcy and / or whether the employer will know if I file bankruptcy. The short answer is generally no. In fact, usually the fact that you have filed bankruptcy is not even known to your employer. The bankruptcy court doesn’t routinely send notices to an employer when her employee files bankruptcy.  There are very rare exceptions. One occurs if you owe your employer money. If you do, you’re required to list him or her as a creditor and s/he DOES get a notice from the Court. Another exception occurs where one’s professional license is directly connected to his / her credit profile. I know of one client whose license as a professional certified financial planner was revoked after he filed bankruptcy, a risk he knew of prior to filing, but in the face of which needed to file anyhow.

Will employer know If I file bankruptcy and fire me?

Thankfully, these exceptions are extraordinary. Now to the question of whether you can be fired for filing bankruptcy. I cover this in greater detail in my article about security clearance and bankruptcy. Generally, an employer is not permitted to fire an employee just because the employee files bankruptcy. As a practical matter, for most employers, the occurrence of an employee filing for bankruptcy would be much more information than he/ she wants. For the vast majority of employees, filing bankruptcy is not even relevant to their occupational responsibilities.

I don’t want to minimize the invasion of privacy one would feel IF one’s employer learned of his employee’s bankruptcy filing. There is a very good reason I qualify this with a big “IF.” That reason is that in my twenty-one years in practice the only time I know of a client’s employer learning of the bankruptcy was when a client informed his boss that he needed to file. That employer so highly valued his employee that he paid the client’s fee in order to expedite the bankruptcy and free his employee of the distraction of creditors calling. We should all have a boss so generous;)

Military employment  and Security clearances

Military service members especially and also many other government employees have unique risks when it comes to finances. The folks up the chain of command expect their subordinates to have their finances in good order. Otherwise – and this is the conventional, but proven wisdom – the employee may be tempted to do something unethical, illegal or downright treasonous in order to avoid the worst consequences of being in debt. Many military service members and those in the intelligence services risk losing their security clearance if their finances aren’t sound enough for the commander’s / supervisor’s criteria. Often as not, the employee’s work requires that security clearance so losing the clearance = losing the job. Please also read my article on “Security Clearance and Bankruptcy.”

It may seem ironic, but I’ve represented clients whose security clearance came up for review and their supervisor’s advice was to consider bankruptcy. In one such case, the supervisor actually gave the employee – who was working for a defense contractor – an ultimatum: file bankruptcy or you’ll lose your clearance and, therefore, your job. All is well with her now, having gotten her bankruptcy discharge (which, by the way, the supervisor also demanded to see.)

Chapter 7 bankruptcy requires detailed planning

chapter 7 bankruptcy

chapter 7 bankruptcy

Chapter 7  bankruptcy is what most of us think of when we think about bankruptcy – even if we don’t know it. 72% of all bankruptcies filed are filed as a Chapter 7 bankruptcy. It’s also called the “fresh start” and alternatively “clean slate” bankruptcy. It is all of that.
Chapter 13 filings comprise about 25% of all bankruptcy cases filed. It used to be called a “wage-earner plan.” The person who filed Chapter 13 had to have a pretty static monthly income. That way, s/he could maintain a consistent payment into the plan.
Chapter 7 is usually simpler, pretty much always faster and less expensive than a Chapter 13. There is much about this type of bankruptcy that depends on how you “package” your financial situation. In order that gets to keep assets you are entitled to it is important that you have a bankruptcy lawyer that will dive deep into exactly your financial situation   Understanding this completely requires a sit-down meeting between you and the attorney.  During that meeting, that attorney should be asking you many detailed questions. Questions about your cars, home, your childcare, insurance, and personal assets like jewelry.  Now back to your education…

Chapter 7 bankruptcy cliff notes

A “fresh start” or “clean slate”, Chapter 7 is the simplest form of bankruptcy. It is designed to let people (and sometimes businesses) get out of debt without repaying any of the “unsecured” creditors.  Chapter 7 also requires the person(s) filing go turn over to the bankruptcy trustee all “non-exempt” assets. But skilled planning with an experienced bankruptcy lawyer in San Diego can usually make sure to exempt the property. (i.e., the filer gets to keep the property.)

Chapter 7 bankruptcy is part art and part science

With Chapter 7 bankruptcy, the Court, not the creditors, decide whether any assets should be sold to pay creditors. There is both an art and a science to actually completing the documents to be filed in Chapter 7. Much greater skill is needed to plan for minimum loss to the person filing. Ideally, Paul likes to present the client’s scenario to the Court and trustee as a No-brainer. “If my client can’t pay reasonable living expenses and have some money left over, it’s pretty smooth sailing.”

Paul must file his clients’ Chapter 7 case in the right venue – a physical location. That’s identified by where the client(s) have lived for the better part of the last 180 days. Not surprisingly, the process requires the person(s) filing to bare his / her / their financial soul to the court and the creditors. All income, assets, debts, and creditors must be disclosed. Again, careful and skillful planning is essential!

If you are considering Chapter 7 it is important to get real attorney advice. So many people wait too long to get the advice that is a free bankruptcy consultation.   A “fresh start planning session” with Paul Staley will give you the answers to the questions you have about bankruptcy, Chapter 7 or 13. Paul has practiced bankruptcy law in San Diego for the last 20 years serving people like you. In this meeting, you and Paul will go over all your legal options and your financial situation. You will know at the end of the meeting what you need to do next, and how to go about it.

 

Bankruptcy when married

What happens if you file bankruptcy when married ?

If only one spouse is in debt or in need of bankruptcy relief, only that spouse should file. It may seem obvious, but there’s generally no reason to torpedo both the filing and the nonfiling spouse’s credit score unless there is a reason.   Where I practice bankruptcy law (in California), it’s at least remotely possible that creditors could go after the non-filing spouse for “community debts” if the creditor is shrewd about applying the Family Code. In the 20+ years, I’ve been in bankruptcy practice though, I have yet to experience a creditor trying this approach with any of my clients’ spouses. But I do know it’s been done.

“I’m married. My spouse is filing. Do I have to file with him/her?” No. See above.

How will assets, credit score, and access to my credit card accounts be affected if my spouse files bankruptcy?

In general, the filing of bankruptcy by one spouse will not automatically and adversely affect the other’s assets, access to credit including credit rating.  A consumer’s credit score and credit history is his / hers alone. Most creditors do not attempt to collect from someone who is not the borrower of record, i.e. signed the application for the loan or credit card because it’s too much additional work and the result for the creditor is often uncertain even in community property states. Pay careful attention to credit cards held jointly, though. Obviously if after the bankruptcy you and your spouse apply for joint credit, there is an impact. The card issuer may cancel and close the entire account or only as to the spouse filing bankruptcy.

Does one spouse’s bankruptcy filing change the character of joint debts? The short answer is no. A debt that was joint prior to the filing of the bankruptcy is afterward the debt of just the nonfiling spouse. There is a difference in how this subject is treated in a Ch. 13 versus a Ch. 7. But keep in mind that although 25% of bankruptcies are filed as Ch. 13s, only about a third of those cases actually survive the Chapter 13 plan and get a discharge. So in about 7.5% of the bankruptcy cases, the difference ultimately matters. A Ch. 13 reorganization allows the filing spouse’s Plan to determine which creditors get paid and how much. A Ch. 7 bankruptcy doesn’t confer this benefit on the nonfiling spouse.

“The state I live in is a community property state. Does that make a difference? If so, how?”  There are nine community property states: California, Arizona, Wisconsin, Idaho, Nevada, Louisiana, New Mexico, Washington, and Texas. I’m only licensed to practice in California so I won’t pretend to be familiar with the state-by-state nuances of the other states in that list. But some characteristics are shared among them all. Generally, in a community property state, assets acquired during the marriage with earnings are owned equally by the husband and wife. Likewise, debts incurred during the marriage are owned equally by husband and wife.  In California, community property is “liable” for the “separate property” debts of either party.

Here’s a classic example, taken from a real case: Man gets divorced, falls behind on his child support to the tune of $20,000. He remarries and, with his new wife, buys a home. His former wife puts a lien on that home for the $20,000 owed. Valid lien? You bet, at least in California. This is obviously a very big deal and triggers the need for smart planning by the bankruptcy lawyer. It’s also a trap for the unwary. Say the divorced-and-remarried man in our story decided to quitclaim the home to his new wife in order to avoid a lien. Probably a very bad move in the context of either bankruptcy or Family Court. Bankruptcy law doesn’t trump state law as to the nonfiling spouse nor as to community property held by the debtor (the spouse who filed bankruptcy) with the nonfiling spouse! This same theory can be applied to any community property asset, whether it’s a bank/credit union/brokerage account or motor vehicle, to name just of few of the most commonly held community assets.

 

I Get Harassing Calls and Dun Letters from Collection Agencies Regarding My Spouse’s debt. Is there anything I can do?

Collection agencies are a species so unique that they have their own federal act defining how they may – and may not – behave The Fair Debt Collection Practices Act [FDCPA]. And in California, consumers also have the additional protection of the Rosenthal Act, which essentially takes much of the FDCPA and applies it not just to collection agencies (“debt collectors”) but also to the original creditors, often an in-house collection department of the creditor.  Neither you nor your spouse has to be in bankruptcy to invoke these laws.

How do you do that, make creditors stop?

Practically speaking, it’s usually more effective to (1) dispute the debt with the collector – demand written proof the debt is owed; (2) secondly, if the debt is owed only by your spouse, you may demand that the collector cease all contact with you.

It’s especially offensive when the person owing the debt has filed bankruptcy and the collectors keep calling. Most of them know better and abide by the law. There are exceptions. While the bankruptcy case is ongoing, the spouse who filed may ask the Court to sanction the creditor for a violation of the “automatic stay”, the rule which as part of Bankruptcy Code Section 362 says creditors must cease all attempts to collect from the spouse who filed. If a creditor persists in this behavior – calling, writing, demanding payment – after the bankruptcy case is closed and the discharge has issued, the creditor may be sanctioned for a “discharge violation.” For you to know these rights and just threaten to invoke them is usually enough to make any sane creditor abandon all attempts to collect.

May I Keep My Bankruptcy Filing a Secret From My Spouse?

Maybe. If there are any debts jointly owned with your spouse, that must be disclosed in your bankruptcy filing and the “co-debtor” spouse is entitled to notice of the proceedings. If there are no joint debts, you may skirt the requirement to disclose, at least in a Ch. 7. In Chapter 13, though, which drags on for years, it’s practically impossible to hide it. Wage garnishment and the surrender of tax refunds are common mechanisms to pay the Ch. 13 plan. Do we really think the nonfiling spouse isn’t going to notice? But the practical answer is that it’s not a good idea to hide your bankruptcy even if you could get away with it.  Mailings from the bankruptcy court will come to the address you give the Court. If that’s your home, OOPS! You don’t need rocket science or even this article to know that keeping such a secret could ultimately have a significant and negative effect on your marriage.

 

Small Business owner filing Personal bankruptcy

Will My Small Business Be Affected by my Personal Bankruptcy?

Does your personal bankruptcy affect your corporation? Probably, we should talk about how most of us who operate small businesses get credit for our corporations. And that’s by personally guaranteeing the debt. Any small business owner or operator and, their corporation is gonna be affected, by their personal bankruptcy. This is because it’s a virtual certainty that they’re personally guaranteeing the debt of the corporation when they get credit in the corporation’s name.

Read More

Business Bankruptcy Advice

san diego bankruptcy lawyer Can bankruptcy stop foreclosure?

Can bankruptcy stop foreclosure?

Can bankruptcy stop foreclosure?

One of the most difficult and traumatic challenges that a person can face is the prospect of foreclosure. A person’s home normally is the center of life. The idea that one’s home might be taken away from him or she can be a most bitter pill to swallow. Considering bankruptcy is the next thought. If you have found yourself facing the prospect of a foreclosure on your home — or if you have already found yourself smack dab in the middle of a foreclosure case — you did not necessarily have to assume that all is lost. In this day and age, there are some options available to you should you find yourself involved in foreclosure proceedings.

Bankruptcy can hold the foreclosure

Chapter 7 versus Chapter 13 has very different effects when your house is getting foreclosed on. In  Chapter 7 bankruptcy, if the borrower’s behind on the mortgage, the lender is simply going to ask the bankruptcy court for permission to ahead with the foreclosure. And that’s done by filing a motion. Those motions are routinely granted and then the lender goes ahead with the foreclosure.

Now, that used to be the standard operating procedure for lenders, but that was before the real estate bubble sort of burst and now there are practical considerations coming into the picture as well as legal ones and lenders are prioritizing which foreclosures. Lenders will go after the larger balance mortgages first. So, someone with a relatively modest mortgage loan um, might stay in their home for months. So far the record, in my practice, I’ve seen, I had one client stay in his home for 20 months before even receiving a notice of default.

Chapter 13 is actually designed to be able to help the homeowner stay in the house and catch up on the mortgage payments that they’ve missed. the best case is a borrower who has to be in Chapter 13 because of some kind of temporary financial setback. Because, if it’s a permanent financial setback, in their income flow they’re just not gonna be able to keep up with all the payments. That is because they’ve gotta make not only the entire on-going mortgage payment but, then they’re gonna have to make the Chapter 13 plan payment for the credit payment, bills and to catch up all the missed mortgage payments. But, for someone who’s had a temporary setback, it’s a wonderful thing.

Student loans and Credit Cards


Student tuitions that are charged by credit cards are dischargeable in bankruptcy 

If you have found yourself overwhelmed by your student loans you might wonder if you can discharge any student loan debt in bankruptcy.

There is some student debt that is dischargeable in bankruptcy

Student expenses like tuition and books charged on a credit card aren’t treated any differently than other kinds of expenses charged on a credit card .   If you are at a place where you are considering filing bankruptcy for your student loans. You will be well served to go into your records and see what exactly you charged on a credit card while you were in school . . Often the idea, of borrowing on a credit card to finance educational expenses is a “hindsight is 20/20” thing. When the  student borrower on a student loan has completed his / her education, finds himself in a bad financial bind and learns he could have made a different choice from the outset. 

But the uniformity of treatment of is both good news and bad news. As with any other debt incurred on a credit card, if it looks like the borrower never intended to pay it in the first place, the lender can fight back even in a bankruptcy. Any creditor can object to its claim to be discharged in bankruptcy. They do this by filing an “adversary proceeding.”  This doesn’t happen often, but it is  essentially a lawsuit filed within the bankruptcy proceeding itself.
You get the idea. It’s really common sense. If it looks like the borrower has acted reasonably in taking on debt, s/he will not likely face closer scrutiny if s/he later files bankruptcy.

 Should you charge your student loans on a credit card ?

These days, credit card interest rates are at historic lows. Money is practically free to the banks and they’re passing some of that happiness along to borrowers. It may make sense to many a borrower to finance his/her education on a credit card simply because the rate is so hard to match even under student loan programs.
If you think you might need bankruptcy and have student loans -go back in the records and review .What exactly did you charge by credit card.Then call us  to set up a meeting with Paul, he  will be glad to meet with you

Can I File Bankruptcy 2 Times?

Can I file bankruptcy twice?

The general rule is that one can only file a Chapter 7 once during any eight year period. So long as the person filing hasn’t filed in the previous eight years (for Chapter 7, anyway.), he/she/they may file for Ch. 7. For Chapter 13 cases, you must not have filed in the past FOUR years. In some rare cases, a filer may file first a Chapter 7, then four years later a Chapter 13. In the trade, this strategy is know as a “Chapter 20” – although we should be clear here that there is no such thing as a Chapter 20 case filing.

It is rare for a debtor to file bankruptcy more than once in a lifetime. But it’s not unheard of. Sometimes tough times persist. Or they recur. Or, particularly for the most entrepeneurial among us, he or she is more comfortable taking risks than are most of us. Those risks often involve capital which the debtor puts at risk. Sometimes it’s the debtor’s own money. Other times, it could be money others have invested or maybe they have lent to the debtor. Interestingly, many of those who fail often and spectacularly are also those most talented at persuading others to back yet another venture. I suppose it wouldn’t be fair to the rest of us if they always succeeded the first time out of the gate;)

I have represented only a handful of clients in more than one bankruptcy over the past nearly-thirty years in practice. This belies the salacious rumors sometimes repeated by the lending lobby. They tell legislators fictions about how filing bankruptcy is a crutch, an enabling mechanism for the lazy of morally inferior among us. In my direct experience, nothing could be further from the truth. People treat bankruptcy as a last resort – sometimes waiting longer than they really should have. Don’t be that person.

Is bankruptcy a public record in San Diego?

Filing for bankruptcy is a matter of public record. So the idea that you can keep bankruptcy secret isn’t really true. It is something that you really have to look for to find out about. Who files bankruptcy in San Diego is not easily accessible knowledge. It is not published in the  San Diego newspaper under notices.

If you file for bankruptcy, you must list all of your creditors. Sometimes those bankruptcy creditors might include family and friends who might have cosigned a loan for you. Those bankruptcy creditors will receive notice that you filed. You can find out about a personal bankruptcy on your credit report so some jobs will know filed bankruptcy.  While filing for bankruptcy is not what anyone wants to do, in today’s modern times, many people have filed for bankruptcy.  The last economic storm we went through included many people got caught in the undertow.

However, if you want to keep your bankruptcy filing a secret from your friends or family, the odds are that they may never know. The Bankruptcy Courts and Trustees do not inform others of your bankruptcy filing unless they are in some way related or involved in your case. There is a good chance that many people you know (family, friends, neighbors, co-workers) have filed for bankruptcy in the past and you were unaware. If filing bankruptcy is a viable option for you, embarrassment should not be a barrier to obtaining relief.

paul staley bankruptcy lawyer
The Law Office Of Paul Staley provides legal advice and representation for residents of San Diego County. The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.
Paul Staley
Bankruptcy Attorney
1901 1st Ave., FLR 1 San Diego, CA 92101
Phone: +619 235 40 95
Email: pstaley@paulstaley.com

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