Faces of bankruptcy

Rebuilding Lives After Bankruptcy


Tamara Ricks of Sunset, Utah, was offered a billing position by the municipal water, sewer and garbage department in nearby Washington Terrace, contingent upon a credit check. Ms. Ricks says she was upfront with the company about her bankruptcy: She and her husband filed a Chapter 7 petition in February 2010 after their ice-cream parlor went under and her husband's construction work dried up. They listed more than $33,000 of debt to creditors including JPMorgan Chase & Co. and Discover Financial Services.

The interviewer, she says, explained that would be a problem; shortly afterward Ms. Ricks received a letter saying she had been turned down. "There's no doubt in my mind it was the bankruptcy," Ms. Ricks says. "I was very surprised. I would've thought that they would've taken the circumstances into consideration."

The city treasurer, Laura Gamon, who also oversees human resources, says Washington Terrace doesn't comment on personnel matters but that its policy is to require credit checks for employees who deal with finances or consumer information. "It's a way we protect our citizens," Ms. Gamon says.

Federal law bars public employers from denying someone a job because of bankruptcy; the laws for private employers are more vague.

Ms. Ricks now steers clear of positions that require credit checks. She is working part-time in a school lunch program and her husband is receiving unemployment benefits. Both are searching for full-time work.


Linda Frakes filed for bankruptcy protection in October 2008, listing nearly $310,000 of credit-card debt owed to everyone from American Express Co. to Home Depot Inc. The bulk of it was from the cost of eight Curves fitness centers in which she had invested. After brief stint in a dental office, Ms. Frakes is now unemployed, living on $330 a week of unemployment benefits and odd jobs.

After losing her house to foreclosure, Ms. Frakes began her search for rentals in the Atlanta suburbs. Duplexes turned her down; so did owners of single-family homes. Eventually she zeroed in on a house within walking distance of her teenage son's school. Although the owner was reluctant, Ms. Frakes says she talked him into it, and offered to show his other properties in the neighborhood to prospective tenants.

Apartment complexes sometimes will take into account individuals' circumstances. Archstone Operating Trust LLC, which operates about 70,000 apartments throughout the U.S., uses credit-scoring software that predicts an applicant's likelihood of default based on credit history, income and other factors.

"There are good bankruptcies and bad bankruptcies," says Donald Davidoff, Archstone group vice president. "If someone has a bankruptcy but it's clear he didn't just go on a credit binge, there's still a chance we'll rent him an apartment."

Getting a car presented another, ultimately surmountable, challenge for Ms. Frakes. After her car was repossessed, most dealers refused to finance a new one. Then a local dealership offered to finance a used 2005 Jaguar station wagon. "I ended up buying the Jaguar because they are the only ones that would loan me the money," Ms. Frakes says. "I'm still floored. It was a ridiculous interest rate, but I was happy." She paid about $1,400 upfront and makes $300 monthly payments at an 18% interest rate.

Comment: More in the article. Bankruptcy has dire consequences (as it should).

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