Finding a job in this economy can be very difficult to say the least; however, some employers use background and credit checks that can make it seem impossible. Approximately forty-three percent of companies use credit checks as a prerequisite to employment. The credit checks are used for various reasons, including attempting to determine if a person has a propensity to steal because of debt, etc. Despite this reasoning, however, many studies conducted by various unbiased groups have found that a person’s credit history does not predict job performance.
In an effort to stymie the use of credit checks, especially in this difficult economy and while unemployment rates are high, Tennessee
Tennessee Representative Steve Cohen
Representative Steve Cohen has introduced HR 3149, The Equal Employment for All Act, which would help individuals, especially students, recent college graduates, low-income families, and senior citizens, to build or rebuild their credit by obtaining a job. According to Representative Cohen, one-third of individuals making less than $45,000 a year have poor credit scores due to bankruptcy, foreclosure, loan delinquency, divorce, medical debt, or unemployment. Their credit score can continue to be adversely affected the longer they remain out of a job, and companies using a credit investigation to determine whether to hire them adds to their problems.
The Equal Employment for All Act would prohibit employers from using an individual’s credit check as part of the hiring or firing process, unless the job involves national security, FDIC clearance, or significant financial responsibility – positions such as loan officers, bank managers, or financial officers. Representative Cohen has noted that approximately forty-six other House Representative colleagues have endorsed the Equal Employment Bill. He has stated that the purpose of the Bill is to prevent the loss of job opportunities for people who need them the most and to stop a hiring trend that will only hurt those who need the employment the most. In these difficult economic times, people are continuing to struggle with debt and many are attempting to work their way out of it. This Equal Employment Bill represents a tangible, simple, and immediate action that can be taken to provide unemployed individuals an opportunity to work their way out of debt without some of the roadblocks along the way.
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Knowing what to expect can make filing for bankruptcy a smoother, less painful process. Here are some helpful tips and secrets about filing for bankruptcy:
Personal bankruptcy is not just for the poor anymore; formerly affluent people are being pushed into bankruptcy more than ever before. Due to the decline in real estate values and the increase in job losses in professional positions, 8.1% of bankruptcy filers last year made over $60,000. This fact lessens the stigma that personal bankruptcy is for the poor and those irresponsible with their money.
You can choose the best way for your debt to be handled when filing for personal bankruptcy. If you file for Chapter 13, you play an integral role in determining how you will pay off your debt. You will help design a payment plan that works for you, and thus you have a lot of choice about the way your bankruptcy plays out. Even with Chapter 7, you and your attorney can negotiate with creditors to find a way to fit your needs. Chapter 7 and Chapter 13 bankruptcies can be complicated, however, so it is highly recommended that you consult a bankruptcy attorney before filing either type.
A common misconception about bankruptcy is that it will leave you with nothing and homeless. Even in Chapter 7 cases, in which most a debtor’s assets are liquidated in order to pay off creditors, debtors often get to keep their homes. This could be because the debtor has taken out a second mortgage or the value of the home has fallen. There is also something called the homestead exemption which most of the time allows the debtor to keep their main residence if their equity in it is below a certain threshold. The laws vary between states, so it is recommended that you consult with an attorney before moving forward.
Bankruptcy could potentially improve your credit scores in the long run. While it is true that the immediate effect of bankruptcy is a drastic lowering of your credit scores, bankruptcy can be less damaging down the road than juggling late payments on credit cards for years in an attempt to delay the inevitable. Because 35% of a person’s credit score is based on payment history, it is important to keep from missing any payments and establish new credit as soon as possible. Bankruptcy stays on your credit report for 10 years, but you can work to repair it immediately.
Many debt settlement firms can actually do more harm than good. Most are unregulated, for-profit, and require regular payments before even helping the debtor. Because they are getting fees every month, they have little incentive to settle with creditors quickly. I recommend being very wary of debt settlement firms.
While it’s a natural desire to pay back friends and family before filing for bankruptcy, it can cause many problems. The trustee has the power to sue over any money repaid to friends and family within a year of bankruptcy if it is not voluntarily returned. Bankruptcy filers must disclose everything they’ve sold, transferred or given away in the past two years, and attempting to hide assets from the court can lead to bankruptcy discharge or even jail time for perjury.
Even if you stop receiving bills, it is still important to pay them. When you file for bankruptcy, you stop receiving collection calls and most bills aren’t sent to you, but that does not mean that you are released from obligations for paying them. If you file for Chapter 7 bankruptcy you must remember to continue to pay for what you want to keep, known as “secured possessions” such as a car or house, even if you don’t receive a bill.
Timing is very important, and when you owe more than you own, it’s time to talk to a lawyer. It does not mean that bankruptcy is the next step. As counter-intuitive as it may seem, it is sometimes best to wait until you think the worst is over. Otherwise you may file prematurely and acquire more debt that will not be included in the bankruptcy discharge. For example, if you are facing hospitalization you may want to wait to file until that’s behind you. However, there are other situations where it is better to file sooner rather than later. Legal advice can help you find the correct timing.
There is nothing easy about bankruptcy, but it certainly does not have to be the end of the world. An important part of coping is for debtors to acknowledge the normal feelings of depression, fear, and anger that come with filing for bankruptcy, and to make sure to reach out to support networks. The stigma that comes with bankruptcy has been lessened as it becomes more widespread and accepted. Often times filers come out stronger than they expected.
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Mandatory Credit Counseling and Debtor Education Courses for Bankruptcy Filers
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 stipulates that when a person files for personal bankruptcy, they must go through two counseling sessions: a credit counseling course and a debtor education course. Within 180 days before a person files for bankruptcy, they must receive credit counseling from an organization approved by the Department of Justice’s U.S. Trustee Program. Then, once they have filed bankruptcy, they must complete a debtor education course in order to have their debts discharged. The U.S. Trustee Program operates in all states except Alabama and North Carolina.
Pre-Filing Credit Counseling
You must go through a credit counseling session with an approved credit counseling organization before you file for bankruptcy. In this course you will receive an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. Approximately half the people that complete the credit counseling session immediately hire a lawyer and file a case, while the other half usually try cutting more expenses to suspend filing.
The credit counseling course should last about 60 to 90 minutes, and can take place in person, on the phone, or even online. Generally, this session costs about $50 but can be waived for consumers who cannot afford to pay the fee. To waive the fee, you need to request a fee waiver from the counseling organization before the course begins.
Once the course is completed, you must receive a certificate as proof of your participation. It is important to check the U.S. Trustee’s website to make sure that you get the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. To protect against fraud, the certificates are produced through a central automated system and are numbered.
When searching for a credit counseling provider, make sure you receive services only from approved providers for your judicial district. Check the list at www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm or at the bankruptcy clerk’s office for the district where you will file.
Post-Filing Debtor Education
As mentioned above, you must complete a debtor education course after you file for bankruptcy in order for your debts to be discharged. As a rule, there is no way that you can take the debtor education course at the same time as the credit counseling course. In the debtor education course, you will receive information on developing a budget, managing money, using credit wisely, and other resources. This course may last about two hours, and like credit counseling can be provided in person, on the phone, or online.
The fee for the debtor education session is generally between $50 to $100. As with credit counseling, if you are unable to pay the session fee, you should seek a fee waiver from the debtor education provider.
Once the course is completed, you should obtain a certificate as proof of completion, separate from the certificate you received after completing your pre-filing credit counseling.
Check the list of approved debtor education providers at www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm or at the bankruptcy clerk’s office in your district.
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