One of the options available to families and individuals who find themselves in financial trouble is to file bankruptcy. On the surface, taking this type of legal action can seem like the perfect solution for becoming free from mountains of unpaid credit card bills and other debts. However, filing for bankruptcy protection also carries some serious consequences that must be considered. If you or someone you care about is struggling with burdensome debts and considering filing for bankruptcy, here are three important consequences that must be considered before moving forward.
Not all unsecured debts can be included in a bankruptcy
Bankruptcy can be a viable solution for credit card debt and most other unsecured debts, but consumers who are struggling with student loan debt are often disappointed to find that most student loans can't be discharged via bankruptcy. This is because most student loans are federally issued financial instruments, Currently, these can only be discharged in a bankruptcy if it is possible to prove a severe financial hardship through an Adversary Proceeding, which is a separate legal action in bankruptcy court. The process to do this can be long and expensive, with only a relatively small chance of success.
Filing bankruptcy can affect your career
While both private and federal employers cannot legally fire an employee because of a bankruptcy filing, either past or present, the employee's career may still be affected. Those who work in the financial industry or other careers that require a security clearance may find themselves unable to attain subsequent levels of security clearances or gain a promotion.
While employees are not required to tell your employer about your bankruptcy filing, they can learn of it in other ways. Employees who have to undergo credit checks for certain positions, or those whose wage garnishments are released under the bankruptcy filing should expect that their employer is aware of their financial situation.
Public access to bankruptcy court documentation
Another very real consequence of filing bankruptcy is that court documents, including those that include extensive personal information becomes accessible to the general public. Even bankruptcy schedules that list your debtors and other financial information will be exposed in this manner.
Taking time to learn more about both the protections and disadvantages involved in a bankruptcy filing is the best way to decide if this type of legal action is right for your situation. To learn more about both Chapter 7 and Chapter 13 bankruptcy filings, contact a bankruptcy litigation law firm, like Molleur Law Office.