Expert: Terry Leeders - 5/29/2009

Question
On Tuesday I had a telephone consultation with the NFCC and she said my interest rates on my credit cards were pretty good and the Debt Management Program that she could offer me would cost about $200 more a month than I'm already paying, she said I should contact my creditors and try to negotiate lower payments, but I did that with a couple of cards and they closed my accounts. Another mistake I made was pulling money out of a 401K to pay off bills. Now I have no more Peter to rob to pay Paul. I have a very good job and make good money. I'm just at the point where I'm going to start missing payments; I'm current on all my payments right now. Do I wait until I start falling behind before I do something? If I file for bankruptcy can I be fired from my job? I need to maintain a security clearance to be able to work in Nuclear Power Plants. Will filing for bankruptcy affect my security clearance? I don't know what alternative I have besides bankruptcy.

Answer
Generally, people are not fired for filing unless they are a stock broker or have an employment contract that says so.  Check with your supervisor or employment contract to be certain.  You do not need to wait until you are in default to file, you can file at any time. Since you say you make decent money, a chapter 13 might be available, think of it as a court ordered debt consolidation, where you can pay your unsecured debts a lower percentage (usually 10-100% depending on your income).   You can also see if the lenders will be willing to do a debt settlement, paying off the debt in 1 lump sum (but you are taxed on the amount that they forgive.)