How to Get Out of Debt With the Get Out of Debt Guy &#187; job

Will I Be Able to Get a Job After Bankruptcy? – Erin

Steve Rhode — Sun, 09 May 2010 14:23:40 +0000

Erin

“Dear Steve,

My husband has been out of work for over a year, and my current job does not pay well. So far, we’ve been able to keep up minimum payments on all our bills, but we have student loans and medical bills coming due that we are currently not able to pay. We are considering bankruptcy, but are concerned that having it on our credit report will hurt our chances of getting better-paying jobs.

How often do employers check your credit report, and how significant is a bad credit score when you’re looking for work? Will it prevent us from being hired? Thanks for your help.

Erin”

The Answer:

Dear Erin,

I’m afraid that the bankruptcy job fear is mostly a myth that lenders love people to spread to stop them from going bankrupt. Except in certain financial positions, I have rarely seen bankruptcy prevent someone from getting any job, including those that require a security clearance.

In fact, here is what the Air Force says about bankruptcy and a security clearance.

The status of your security clearance can be affected, but it is not automatic. The outcome depends on the circumstances that led up to the bankruptcy and a number of other factors, such as your job performance and relationship with your chain of command. The security section will weigh whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility. The security section may also consider the recommendations and comments of your chain of command and co-workers. This is an issue that can be argued both ways, so as a practical matter your security clearance probably should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your clearance, even if you don’t file bankruptcy. In that sense, not filing for bankruptcy may make you more of a security risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility. Eliminating your debts through bankruptcy may make you less of a security risk.

Once I was standing in front of a credit bureau executive and I asked him what was the big deal with pushing job employment and credit reports. He said, “Steve, it just helps us to sell more credit reports.” His honesty was refreshing.

Those people that might not get a job and who have gone bankrupt, may not get a job for some totally unrelated reason. For people that have been some life altering event that reason might be that they interview horribly.

As someone that once had 70 employees and did probably 400 interviews, I can tell you that when someone came into see me and wanted to launch into some long and drawn out story about their misfortune and why they were the victim in some life situation, I would tune out. But I would have hired all 70 employees if they had been bankrupt.

Credit reports and credit history has no proven relationship to job performance. There was recent study but as was discovered, the underlying premise was flawed to begin with.

There’s a lack of published research that would support the use of credit checks as an indicator of aspects of work performance. One might have said “complete lack” until recently. A study on the relationship between financial history and counterproductive behavior in an unnamed federal agency found a relatively small but statistically significant relationship (φ[phi]=.13) between negative financial history (having a bankruptcy, tax lien, court judgment for debt, or six-month delinquency on a debt) and counterproductive work behaviors (cases at the agency involving failure to pay debts, misuse of credit cards and funds, theft, and soliciting or accepting items of value in violation of the law). The agency would not allow analysis for adverse impact. Interestingly, the authors reported that the base rate for counterproductive work behaviors in this agency was 20.6%; an expected base rate would be around 5%. (Reference: Oppler, E.S., Lyons, B.D., Ricks, D.A., and Oppler, S.H. (2008). The relationship between financial history and counterproductive work behavior. International Journal of Selection and Assessment, 16(4), 416-420.) Source

Hawaii, Connecticut, New York, Missouri, and Texas have legislation in the works that would restrict use of credit checks in pre-employment decisions.

I had to go through a pre-employment credit check with IBM after my bankruptcy. I got the job. The only part that sucked was that I knew my manager saw my credit report. Now, looking back on it latter, so what, big deal.

Emily Wants to Know “I’m Pregnant And Got My Hours Cut. What Do I Do?”

Steve Rhode — Thu, 25 Mar 2010 22:09:01 +0000

Emily wrote in to me at GetOutOfDebt.org to ask for help. Here is what she said.

“I’m having some money problems. I’m having to struggle on making a payment on time and cause I’m pregant my hours got cut back at McDonald’s. Just trying to pay people back and stay on top with my debt with rent.

How can i get help with paying my bills?”

Emily,

My gosh this is a difficult and stressful time in your life. In a perfect world it would be great to be able to be pregnant and enjoy that process rather than having to deal with the stress and pressure of money troubles, job issues and making it through life.

I always try to give advice in an honest and compassionate way. I just wish there was a way for me to reach through the computer and give you a giant hug. Sounds like you could use one right now.

Now for some honesty. The idea that the government or someone will help you to pay your bills is an urban myth that has been floating around forever. There is no other way to say this other than it does not happen, It does not exist. It is a lie, a falsehood, an untruth.

Now that being said, there are in fact some ways that someone, the government will help YOU and not your bills. But indirectly it can be helpful to paying bills.

Local and state governments do offer assistance programs to assist with rent, food, etc. These social service programs are available through loads of red tape, dealing with frustrating and often rude government employees and it takes time and patience to work you way through the process.

I would advise you to contact your local social service office and ask for help to find out what you are eligible for. The reaction I hear most often to this is people who say they don’t want to be on benefits. That’s a pride issue, not a reality issue.

If you’ve paid taxes and helped to fund the system, you should take advantage of it when you most need it. Pride is one thing but even salt does not help it to taste better when you are hungry.

We can’t forget the obvious contributors here as well. The three most important people in your life right now to help you through this will be your family, the baby’s father and the bankruptcy attorney.

If the baby’s father is fully participating and helping you both emotionally and financially, he deserves a hug. If he is not, then he needs to know that he has a responsibility to provide and help you to care for the child.

There is a legal process to help make them pay for child support. And by the way, child support is to be used to pay for the child, not your support. Talk to you local child support office to find out what to do to get the support your child is eligible for the baby’s father if he isn’t around or does not want to care for you or the child.

Family can be the saving grace at times like this, they can help us to make it through difficult times but asking them to pay your bills for you would be unreasonable. They are not their bills, they are your bills. If you can’t afford to pay your bills then you need to go and talk to a bankruptcy attorney. It would be reasonable to ask your family to help you pay for the bankruptcy lawyer. It is a one-time expense that will make a big difference. I’m all for those kinds of investments.

The law of the universe is that to overcome money troubles you either need to earn more or pay less. If McDonald’s isn’t able to offer you more hours then you could go look for a better paying job or go bankrupt to eliminate your debt.

Based on what you told me, and my years of experience I know you are living on the edge and just making it. A visit to the bankruptcy lawyer is the the most logical solution.

Once you put these financial pressures behind you then you can focus on having a less stressed and a more healthful pregnancy. That’s important. Stress during pregnancy does not help the growing life within. Start being a good mom now and take responsibility for dealing with the bills now.

Let me know how the trip to the bankruptcy attorney goes.

If You Live In The Real America, Be Patriotic. Go Shopping And Run Up Credit Card Debt.

Steve Rhode — Tue, 09 Feb 2010 23:54:40 +0000

Have you heard the stories that the government wants us to get out and go shopping to stimulate the economy? Remember after 9/11 when President Bush encouraged people to go shopping to get things moving again?

Well I think the patriotic shopping argument may have gone too far now with Discover flying their American flag credit card. (You can see the card here.) Every time you’d pull it out you know you were doing your best to help jump start the economy. And what could me more red, white, and blue than a 0% intro APR?

But at a time that people are being encouraged to go shopping and spend, it is the exact wrong thing for people to do when faced with escalating costs, an uncertain job market and foreclosures in every neighborhood. Don’t believe me about the foreclosures? Take a look at RealtyTrac.

Now if you feel compelled to do your patriotic duty, please be careful. Maybe an American flag cling on your window as you drive by the mall might be a good first step.

I Was Thinking of Taking Your Advice and Filing for Bankruptcy. – Miss M

Steve Rhode — Fri, 25 Dec 2009 17:00:47 +0000

“Dear Steve,

I was thinking of taking your advice and filing for bankruptcy. Of course, I’d like to apply to buy a house, especially during this time when the housing market is down (Good for us buyers but bad for current owners). Also, I expect to get my clearance background cleared and updated (I had a re-open investigation when I hit my 10-yr mark in 2007 but never completed it before my last job ended) and not sure if bankruptcy would affect my background investigation.

Is it good to file bankruptcy while fully employed? Would it affect my current situation and job, as far as HR and my Employer is concerned? Would my car note be discharged as well (I’m so behind with my car note but I can’t afford to catch up with the payments)? How would you suggest starting fresh for someone who is around the corner from being 30 and wanting her own place? Any further thoughts, suggestion and advice is very much appreciated. Thanks for your time! :)

Miss M”

The Answer:

Dear Miss M,

I can’t speak specifically about the status of your security clearance but if you are already behind on bills and overextended then that creates a security risk right there.

If you are worried about how bankruptcy may impact your security clearance then I would suggest that you have an open and frank discussion with your security officer at your company.

Around the corner from 30 is still young these days with many having to work into their 80s. The issue about what is best for your company, rather than yourself is a bit misdirected. I understand your concern, you don’t want to do anything to jeopardize your job but I think you need to get your own house in order first. Unless you tackle your problems head-on they will only continue to hurt you for years and years to come.

My advice is always to be as open as you can. In your case I’d ask for a confidential conversation with an HR representative and the designated security officer. If they both don’t have an issue or a problem with you acting responsibly to take care of your debt, don’t wait.

The irony here is that unless you go bankrupt to tackle the old debts you probably won’t be in a position to purchase a house in the next several years. But if you do go bankrupt, clear your old debts and get back to saving money again you’ll be ready to buy a house within a couple of years.

I Was Told I Had Quit, But I Hadn’t. – Henry

Steve Rhode — Thu, 19 Mar 2009 14:34:20 +0000

Henry

“Dear Steve,

I worked for a company for 4years,I quit do to alot of stress ,personal and from my work .I was a sanitation supervisor at a produce packing company.I was required to work a lot of hours under the gun and after all the stress i was going through I went to my boss and told him I was going to quit,he told me everyone was under a lot of stress and to think it over and get back to him on my decision.

I was due back to work on Sat I decided not to quit and was going back to work on my scheduled day, however, got sick and could not make it, but I called my lead man and told him to advise my boss that I would return to work on Sunday. When I went in to work Sunday I was told that I had quit. That was almost a year ago, and I have not been able to find a job in this economy.

I need some advise .

I am a 53 year old male!

Henry”

The Answer:

Dear Henry,

I’ve thought about your situation and there is no doubt that it is unfortunate but there is nothing we can do to change the past.

The time to fight that error would have been then. Even if you had to go see a lawyer to fight for your job back, a year ago would have been the time to do it. So, what can we do looking forward?

The hardest time to get a job is when we are told it is tough to get one and we are feeling dejected and down. But, even in the worst economies people are still being hired.

I always found that the secret to getting a job is to make it a job of getting a job. That means to spend five hours or so a day in looking. Don’t just settle for the typical way of looking in the classified section of the newspaper or using the online sites to look. You’ve got to get creative and be excited about being told no.

I know that sounds crazy but seriously, each no that you get means that you are one rejection closer to a yes.

Here are some tips that have worked for me and others in the past.

Use your telephone book. Start calling local businesses in your are and ask if they have any job openings. Jobs do exist that are not always advertised.
If you send in a resume, put a gold star in one of the top corners. It helps to draw attention to your resume.
If there is a particular part of town that you are looking in, go door to door at those businesses and ask them if there are any openings.
Be sure to scan the America’s Job Bank listings in your state to identify current openings you might not see elsewhere.

I hope that helps. Keep me posted on your efforts and success in locating employment.

Janet Is In Trouble. She Says “I’ll Be Out Of Money Soon. What Should I Do?”

Steve Rhode — Wed, 01 Oct 2008 03:25:09 +0000

“Dear Steve,

I bought my first home, moving from Pennsylvania to Florida, the only place I knew all my life, following the death of my beloved mother.

I was able to put a down payment on a house in a beautiful community in Florida, & live rather cheaply as compared to Pennsylvania. Unfortunately, the job market has not been kind to me and I have been unemployed for 5 months. I have borrowed from every resource possible and have been through a line of credit of 31,000 over the past 1.5 years.

The pay scale here is ridiculous…something I was not aware of and only wish I had done my homework on that front. I am now trying to start my own home based business, but in the meantime I have all these bills that are going to go unpaid after this month, including my mortgage.

I fear going into foreclosure or losing my home. I am determine that I will not become another statistic.

What do you suggest I do to get by for a few more months. I know I will do well with this business and or find a job…it is not paying my bills that concerns me. I had a great credit score, but I believe it went from 730 to 680 now, since I missed paying a bill or two by a few days. I do not know what else to do. I would appreciate your input. I have approximately $170,000 debt which includes my two mortgages and credit cards, and need about $2000 per month to pay all my bills.

Help!

Janet”

The Answer:

Dear Janet,

I had so much to say that I launched a new podcast show and your question and answer became the focus of the very first show.

You can listen to the show using the player or link below.