How to Remove the Stigma Attached to Bankruptcy
John Morgan is the owner of the
John Carter Morgan, Jr. PLLC and a bankruptcy attorney in Warrenton, Virginia, with expensive experience handling Chapter 13 and Chapter 7 cases. According to Morgan, one of the biggest concerns people have about bankruptcy is what their friends, family, bosses, and coworkers will think. In fact, people are usually more worried about attitude from families and employers than they should be.
Because of my practice's close proximity to the Washington, DC, metro area, a number of the clients I work with happen to be high level executives who work in government jobs. I hear from many clients who want to file for bankruptcy, but are hesitant to do so out of fear that it will negatively impact their security clearances with the federal government.
In order to ease those fears, I always explain to people that the bankruptcy code itself says that employersand especially the federal governmentcannot discriminate against anyone who files for a personal bankruptcy. They cannot hold it against you that you filed for bankruptcy, and they certainly can't hold it against you in a security clearance.
Tell the Truth
Government agencies that require security clearances for employees typically re-up each employee's security clearance once every few years. It's at this time that many employees start worrying that their bankruptcy filings are going to be held against them. In my opinion, as long as you tell the truth about your bankruptcy then you will pass the test. People who try to conceal the truth will most likely fail the test and not receive clearance, but anyone who tells the truth should be just fine.
In addition, filing for bankruptcy can actually make you an even better candidate for many of these federal jobs, since people who have recently filed for bankruptcy are free of debt and harder to influence with bribes and gifts. It's easier to bribe someone financially who is under the gun with debt, so to speak, than it is to bribe someone who has no debt. So a bankruptcy is actually an advantage in a security clearance.
Lessen the Stigma
Another thing that concerns most people has to do with the social stigmas attached to filing for bankruptcy. One thing that has lessened the stigma, though, is the debtor education course that everyone filing for bankruptcy is now required to complete.
For those who have recently filed for bankruptcy, it is necessary to rebuild their credit as soon as possible. The first way that the process can start is by completing the two-hour debtor education class that everyone must take after filing for bankruptcy.
Debtor education courses cover all types of financial management issues and life skills that many adults still don't understand. During the two-hour class, students are taught how to build wealth, how to build retirement accounts, and how to rebuild their credit scores. Additionally, recent bankruptcy filers are taught what to look for when they sign up for new credit cards, as well as how to properly use these cards without getting back into financial trouble.
Increase Credit Scores
In Warrenton, VA, many of my clients who have filed for Chapter 13 bankruptcy say they'll never sign up for another credit card again. That can be a big mistake, though, since using credit cards wisely is an excellent way to rebuild a credit score. I recommend getting either a personal loan or a credit card, and just paying it back according to its terms.
Another good way to increase credit scores that I commonly share with clients is to get a credit card with a $1,000 limit, and make sure to always keep the balance at $499 a month or less. In other words, use less than half of your credit limit. That is where your balance should stay at. An even stronger suggestion is to continually pay the card down to just a $50 balance, and then let the credit card company continue charging interest on that $50 balance. That way they will put good marks on your credit report by showing that you pay according to their terms.
With more and more people become aware of what filing for bankruptcy really means, social stigmas are continuing to change. Nonetheless, it is important for people to realize there is nothing wrong with filing for bankruptcy, and it is an option that the government has made available for people who need it.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
How to Remove the Stigma Attached to Bankruptcy
By: John Carter Morgan
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