What Are the Consequences of Filing for Bankruptcy?

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The consequences of filing bankruptcy are very limited. It’s illegal to discriminate against people who file bankruptcy, just like it’s illegal to discriminate against people because of their ethnicity, gender, sexual orientation, or religious preference. However, there are a few consequences, which we examine below.

On the other hand, the benefits of bankruptcy are considerable. The Automatic Stay prohibits creditors from harassing debtors. It also prohibits foreclosure, wage garnishment, and other adverse actions. Furthermore, most people get to keep most of their property. Georgia has some of the broadest bankruptcy property exemptions in the country.

A Georgia bankruptcy lawyer can also unlock some advanced bankruptcy benefits. For example, if you are upside-down on your car note, house note, or other such loans, an attorney might be able to eliminate part of the loan and save you hundreds of dollars each month.

Bankruptcy and Your Security Clearance

There’s a persistent myth that bankruptcy adversely affects your security clearance. Like many myths, this one is partially true. Financial problems could lead to adverse action, according to DoD Directive 5220.6. But Guideline F sets forth some mitigating circumstances, such as:

  • Uncontrollable conditions, like divorce or job loss, created financial problems,
  • There are “clear indications” that the problem is under control, and
  • The individual made “a good-faith effort to repay overdue creditors or otherwise resolve debts.”

All these items point squarely to bankruptcy, especially Chapter 13 bankruptcy. So, filing for bankruptcy might be the best way to preserve your security clearance.

Borrowing Money After Bankruptcy

Some banks flatly refuse to deal with people who filed for bankruptcy in the recent past. Some landlords have the same policy.

But most banks welcome borrowers with damaged credit. These financial institutions can charge higher interest rates, which means they make more money off the loan. Your attorney can point you towards such financial institutions.

On a related note, some individuals look down on people who file for bankruptcy. These individuals don’t understand, and probably don’t want to understand, that most people file bankruptcy because of a sudden financial storm, like an aforementioned job loss.

The consequences of bankruptcy are limited and the benefits of bankruptcy are bountiful. For a free consultation with an experienced bankruptcy lawyer in Carrollton, contact Moffit Law, LLC. Home, virtual, and after-hours appointments are available.


Does bankruptcy ruin my credit?

Filing bankruptcy temporarily lowers your score. You have the power to quickly raise it.

Should I file Chapter 13 bankruptcy?

If you are more than one month behind on a home mortgage or other secured debt payment, you should probably file bankruptcy.

Can I buy a car during bankruptcy?

Yes. The judge must approve a motion to accrue additional debt.

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