Will Bankruptcy Affect your Employee Benefits

The declaration of bankruptcy and your employee benefits are completely unrelated to one another. Generally you will find that during the process of bankruptcy the only ones that are going to know about the process are those that you are indebted to. This is because, they are the only real stakeholders in the matter. So those that aren’t involved in the situation aren’t going to know about it, unless you tell them about it or give them access to that type of information.

However, this doesn’t mean that your bankruptcy won’t affect your ability to obtain certain benefits. While the benefits that you already possess are completely safe from the bankruptcy policy, even when you renew your benefits they are safe, initiating a new plan can be completely different. The large majority of companies allow for the automatic deduction from payroll the expenses associated with any of your benefits. They then pay these directly to the company in one lump sum. By doing this, they are essentially taking responsible for that obligation. And in so doing, the company is the one that the insurance providers are going to be directly looking at. This of course creates a huge gap of opportunity for anyone to have insurance if it is provided through their employer at a great discount to them. This also means that you don’t have to worry about the company pulling your credit report in order to verify whether or not you qualify under normal qualifying standards.

But keep in mind, this is not the case if you are applying for outside of the company benefits. If they simply recommend a company and tell you that they will supplement that company if you use them, but you have to make the payments, then it is all up to you and your good credit and name to get approved. Most companies don’t use this option, because it provides virtually no cost savings to the employee and thus costs the employer more if they are to support it. This method means that anything in your financial history must be exposed up front. While most companies won’t deny you, they may require that you pay increased premiums in order to cover times when they feel you may opt out of paying. This of course could make the insurance completely unaffordable to the average consumer.

So, while most consumers won’t be affected by a bankruptcy in terms of benefits, you have to understand what type of plan you have through your employer. Those that are directly paid by them, or that are already established aren’t going to be affected. However, if you have to setup your own policy and make payments directly on your own, then you’re going to find that insurance companies are going to be verifying your income, financial situation, and medical situation in order to make a determination on a premium and if they can accept you or not. This of course can make the process frustrating.

The main thing to remember is that you shouldn’t get out of your current medical plan unless you absolutely have to. By keeping the same plan, they aren’t likely to ever check into your medical record or financial history and if they do, hopefully it is long after you even filed for bankruptcy anyway.

Just be a smart consumer, ask questions, and don’t disclose any information to anyone about your bankruptcy unless it is required. Don’t voluntarily give up that information, make them work to find it out on their own. However, if they directly ask you, it would be fraud to not tell them. Just don’t volunteer the information without being prompted first to do so.