Ripple Effects of Bankruptcy
July 6th, 2009, 2:23 pm
In our current economy, there is a lot of talk about how your personal finances can permeate into your personal and professional lives. When you file bankruptcy, it is well known that your credit report will be severely impacted and that negative information will last for years. Although you might hit a roadblock in terms of borrowing in the immediate aftermath of your bankruptcy, your life will not wait.
One of the most fundamental needs a person can have is housing and after bankruptcy or foreclosure is housing. Many companies or landlords from whom you may wish to rent will conduct background checks that will include a criminal and financial check. If you’ve filed for bankruptcy, especially if it was relatively recent in the last 2 or 3 years, you might have difficulty getting someone to rent to you. One way around this is to rent with individual landlords who are more likely to have the latitude to account for your individual story once they meet with your personally. Apartments managed by a company are more likely to impose their set standards and not rent to you or be unwilling to consider your personal circumstances. Lastly, when looking for your first rental post-bankruptcy, air on the side of fiscal conservativeness and look for a very affordable unit to start. Once you build a strong post-bankruptcy rental history, it will likely over time open more options for you with future landlords.
Another area that can be affected by filing bankruptcy are services that many take for granted including insurance, cell phones, and home data information including cable, phone and internet. Many of these service providers require credit checks before they begin to offer services and if your history is unsatisfactory based on their standards, you may find yourself seeking other avenues to secure these services. If you find yourself in this position, you can expect two distinct possibilities, paying larger deposits if you are allowed to contract for these services or having to prepay for the services. Many companies will require you to pay for the services before you receive them via these larger deposits or limits on your service like prepaid cell phone plans.
Employment is a crucial aspect of anyone’s livelihood and is especially important to discuss in terms of seeking post bankruptcy employment. Potential employers will often conduct credit checks especially if the position entails handling money or other valuables. The best solution to this is to just be aware of the possibility and be certain when applying for jobs.
A final major area to expect to be drastically affected after bankruptcy is clearly the ability to be issued credit either as loans, mortgages or credit cards. Anyone who does extend credit to you will likely impose very high interest rates and severe terms. Be cautious when attempting to borrow by borrowing conservatively and being sure to account for the interest rates when you consider repayment. With credit cards, a new product has recently entered the market in the form of prepaid credit cards. Although these prepaid credit cards have “Mastercard” or “Visa” on them, they are not credit cards and are not subject to credit checks or reports to a credit bureau. Furthermore, since they are nothing more than a debit card, if they’re lost or stolen you are subject to actual cash losses and they are harder to dispute. The issuers of prepaid cards also generally impose more strict rules regarding lost or stolen cards including a requirement to report it within 48 hours or you’ll begin to bear the burden of the monetary loss.
In Massachusetts, if you find yourself facing discrimination from an existing relationship (service provider, employer etc.) after you’ve filed bankruptcy you may be able to be protected under M.G.L. Ch. 151B § 4 §§ 4A that prohibits such retaliation. Bankruptcy is a constitutionally protected act and it is illegal to retaliate against such a protected act. In any aspect of your life post-bankruptcy, the best tool you can have is knowledge so that you are not caught off guard and always have multiple options left available to you so that in the end all of your needs can be met to provide for yourself and your family.
The foregoing article was drafted by Justine Medina, for the Law Office of Goldstein and Clegg, LLC
