Does the current economic situation change bankrupcy as a disqualifier? [Archive] - Glock Talk

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OXCOPS
11-20-2011, 19:44
Had this conversation with a friend of mine, who does backgrounds and applicant processing for his agency. We were talking about a recent round of candidates and he asked me what I thought. He gave me two situations for a couple of applicants.

Candidate 1 declared bankruptcy about 4 years ago after a divorce. Since then, he has worked to restore his credit and is current on payments.

Candidate 2 declared bankruptcy 6 months ago. Seems his wife had a series of surgeries and was out of work for a couple of months. She didn't have enough PTO, so most of it was unpaid leave. Upon further questioning, the candidate said he tried to find second jobs, but no one was hiring.

Now, this agency has an unspoken rule that a bankruptcy within 5 years is an immediate disqualification. However, my friend is questioning whether that should remain the case. If there is a satisfactory reason behind the bankruptcy, should it be allowed to pass?

What do you guys think?

toddmog
11-20-2011, 20:50
Is it an unspoken rule or actual policy? Times are tough, I would lean towards evaluating each situation on a case by case basis. Both scenarios described above seem like legit causes. It wasn't like either ran up $50K in credit card bills and said "forget it, I'll just declare bankruptcy."

razdog76
11-20-2011, 20:59
The purpose for any employer to look at credit reports is to see how squared away the candidate's personal life is. This is important to gauge their decision process. In addition, as an LEO it is also important to have credit squared away in an effort to prevent corruption.

Now to look at it in another light, all of the tests a candidate must pass are to provide the best people for the job. So, for the test to be valid, does it measure/give the answers you need, to produce the best candidate?

IMHO, the answer depends a couple factors. How many applicants were there? How many are left? What percentage have credit issues at this stage in the process? What was the cause of the bankruptcy (misfeasance, malfeasance, nonfeasance, or something exceptional)?

msu_grad_121
11-20-2011, 22:45
Both cases seem like they're not terrible candidates, but rather victims of circumstance. Without knowing all factors, it's hard to say one way or another how a department might look at either case. I will say that I've been told by several agencies that due to the severe economic downturn, they don't rely as heavily on credit scores, but who knows exactly what that means? I know I've gotten a few nasty-grams from Comcast and such, but I've never been told I've been disqualified for credit issues.

Honestly, either case sounds like it could happen to anyone, but razdog's right, they use it as an indicator if you're a turd or not. Again tho, if you're forthright about it and say, "this is what happened, this is why it happened, I'm taking care of it in this way," I don't know too many departments that will straight up can you over it.

Long story short, I dunno.

blueiron
11-20-2011, 23:17
Bk was not a sole DQ for us, contingent upon the circumstances. Medical bills and divorce were usually not a problem, since medical emergencies/chronic conditions cannot be budgeted for by most people. Acrimonious divorces can lead to a spouse emptying accounts and killing credit cards.

Rampant credit card spending for no clear purposes and a BK was a DQ for a period of several years.

Every CLEO is different and each has their preferences. I worked for one who disliked military veterans and wasn't shy about it.

OXCOPS
11-21-2011, 08:27
Is it an unspoken rule or actual policy? Times are tough, I would lean towards evaluating each situation on a case by case basis. Both scenarios described above seem like legit causes. It wasn't like either ran up $50K in credit card bills and said "forget it, I'll just declare bankruptcy."

It isn't specifically spelled out in their evaluation guidelines. Those are written to allow the evaluator to consider the totality of the circumstances. However, in better times it was understood that this would be a no-go. This is their first hire of non-certified recruits in a couple of years.

merlynusn
11-21-2011, 10:16
Without looking at anything else, I'd say that both of those candidates have reasonable reasons for why they declared bankruptcy. Like others have said, it isn't like they were in debt due to credit cards or partying. One was a divorce that was 4 years ago and he's worked to rebuild his credit. The other is for major medical concerns, which is unbudgeted. Heck, if I had to have a surgery and pay my deductible now, it'd be a major stretch and I'd be working a crapload of off duty once I got back to full duty (we can't work off duty when we're in a limited duty status).

jpa
11-21-2011, 10:31
I'll use my own situation as an example.

Last year I wanted to settle my credit cards, but the banks wouldn't talk to me about it unless I was delinquent. So I stopped paying for about 6 months. In that time as luck would have it, I applied for a job at a local LE agency. I made it to backgrounds and the detective ran my credit report. She took her red pen and circled all the delinquencies (5 accounts, 6 months of no payments...didn't look good). I explained the situation and a week or so later got a "thanks but no thanks" letter.

Fast forward to about a month or so ago. I applied for 2 new jobs they had posted for the same agency. Passed the written and interview with flying colors, then went back to the same background investigator after the interview. She remembered me, then pulled up my current credit report. I've since paid off and closed all of those accounts and she was flabbergasted at the change in my credit report. I just got notification of my ranking on the list a couple weeks ago and job offers should be coming by the end of the year. I got my fingers crossed, but it's better than a flat rejection.

NDCent
11-21-2011, 10:43
Maybe I missed something, but what does todays economic condition have to do with either candidate? Neither one were layed off for economic reasons, so whats the reasoning for using a different standard than before? If it's because todays hiring pool is smaller I could see a possible change in criteria, but divorce and sickness in families is an everyday occurrence in good times as well as bad. Don't get me wrong both seem to have reasonable reasons for filing and may be outstanding applicants otherwise, but...

DaBigBR
11-21-2011, 11:18
I wouldn't ever consider it an automatic disqualification, however the circumstances are important. In those two cases one thing that I would look at is the amount of money the applicant would make as an officer versus their current employment and be cautious about somebody taking a pay cut to become a cop.

mixflip
11-21-2011, 12:46
I think today... everybody is affected in some shape or form by foreclosure or bankruptcy so as long as the circumstances are reasonably explained, most depts will overlook those issues on a case by case basis.

I know an officer who had a foreclosure and he was hired. They even told him in the board interview that "everybody knows someone with a foreclosure or bankruptcy".

OXCOPS
11-21-2011, 19:57
Maybe I missed something, but what does todays economic condition have to do with either candidate? Neither one were layed off for economic reasons, so whats the reasoning for using a different standard than before? If it's because todays hiring pool is smaller I could see a possible change in criteria, but divorce and sickness in families is an everyday occurrence in good times as well as bad. Don't get me wrong both seem to have reasonable reasons for filing and may be outstanding applicants otherwise, but...


It doesn't directly. Well, the second guy was trying to pick up extra work to pay the bills, but couldn't find one.

Indirectly, I wondered if agencies are looking at them a little more reasonably since the current economic downturn has affected so many.


I wouldn't ever consider it an automatic disqualification, however the circumstances are important. In those two cases one thing that I would look at is the amount of money the applicant would make as an officer versus their current employment and be cautious about somebody taking a pay cut to become a cop.

In their cases, they would both be getting a pay bump.

Kahr_Glockman
11-21-2011, 21:08
My dad is the chief deputy for a 180 man agency here in Texas. I asked him about this situation because I am in the same situation. His agency is looking at credit reports but they are not DQ'ing over this. They have seen a marked increase in bad credit and they are having a hard time filling positions with people with otherwise good backgrounds.

blueiron
11-21-2011, 22:38
Maybe I missed something, but what does todays economic condition have to do with either candidate? Neither one were layed off for economic reasons, so whats the reasoning for using a different standard than before? If it's because todays hiring pool is smaller I could see a possible change in criteria, but divorce and sickness in families is an everyday occurrence in good times as well as bad. Don't get me wrong both seem to have reasonable reasons for filing and may be outstanding applicants otherwise, but...

So because someone has a child born with a pre-existing medical condition and whom insurers will not touch or because an man/woman has a cheating spouse who goes binge spending for their new paramour and cleans out the joint bank account for their new life together; these unintentionally affected people are not qualified to be cops?

Would you extend your reasoning to everyone in traffic accidents, proposing that anyone involved a traffic accident has some contributive effort, as well?

msu_grad_121
11-21-2011, 22:46
Would you extend your reasoning to everyone in traffic accidents, proposing that anyone involved a traffic accident has some contributive effort, as well?

Welcome to the No-Fault state. You're 20% at fault for even being on the road! It boggles the mind, huh? :rofl:

PlasticGuy
11-21-2011, 23:02
Bankruptcy is a disqualifier for a couple reasons. First is that it may be an indicator of bad decision making, laziness, or both. Second is that not having money makes a person more corruptable. Even if the first one is not true, the second always is. I hate to be brutal. I would also hate to be working with someone who could be easily bribed.

L-1
11-21-2011, 23:10
Bankruptcy is a legal right. Absent any evidence of fraud, the mere fact that a candidate has undergone bankruptcy cannot be the sole basis upon which employment is denied. (11 USC § 525) Investigators may inquire into the circumstances that led up to bankruptcy, including the examination of supporting court records regarding reported assets and liabilities at the time when the bankruptcy petition was filed. Once filed with the United States District Court, these are public records.

Remember though, Bankruptcy alone is not necessarily the issue. Financial history checks are performed on applicants to determine their credit standing with lenders as an indication of the candidate’s dependability and integrity. Areas that will be addressed include whether reported sources of income are lawful and fully accounted for, whether the candidate meets his/her obligations as agreed, and the reasons underlying any indications of credit problems (e.g., are the credit problems the fault/responsibility of the candidate, or are they related to the actions of others?)

Things like past due accounts, discharged debts, late payments, collection accounts, civil judgments, and/or bankruptcy, history of flagrant financial instability such as multiple personal bankruptcies, financial obligations for which legal judgments have not been satisfied, failure to meet obligations (for example, auto insurance, auto registration, selective service registration, IRS requirements, child support obligations) are viewed as lack of personal accountability and responsibility, which are minimum requirements for the job and can lead to a financial DQ.

series1811
11-22-2011, 01:32
The last briefing I had from our security people (who process our SSBIs) for our security clearances was about two years ago. At that meeting, bankruptcies and foreclosures came up and we were told that neither was an auto dis-qualifier any more for a TS, and that each case was reviewed on the particulars of the situation.

I've lost count of the number of federal agents I know who had to take short sales or foreclosures because of being transferred with an underwater home loan. PCS moves in my agency only pay you fair market value for your home. If that is less than you owe, you can ask for a one year extension of the move, and then you have to take the hit or find a new job.

We all thought that our HQS would ease up on the moves to keep so many agents from taking that financial beating. We were wrong.

OXCOPS
11-22-2011, 08:26
Bankruptcy is a disqualifier for a couple reasons. First is that it may be an indicator of bad decision making, laziness, or both. Second is that not having money makes a person more corruptable. Even if the first one is not true, the second always is. I hate to be brutal. I would also hate to be working with someone who could be easily bribed.

Wait, bankruptcy equals corrupt cop?

lawman800
11-22-2011, 13:46
We have never made bankruptcy an automatic disqualifier. You gotta look at the total circs and see how did the applicant get into the situation and how he is taking care of it.

Having a bad run and losing a job or medical accident which wiped you out but making good and trying to pay things back via settlements is a lot different than just running up ten credit cards to buy crap and declaring bankruptcy so you can say **** you to the creditor.

ETA: one of my best friends and one if the best cops I ever worked with went through a bankruptcy because he couldn't get a job that paid enough to cover his student loans. He eventually got back on his feet and is making good on all his loans, including one from me.

DaBigBR
11-22-2011, 16:04
Maybe I missed something, but what does todays economic condition have to do with either candidate? Neither one were layed off for economic reasons, so whats the reasoning for using a different standard than before? If it's because todays hiring pool is smaller I could see a possible change in criteria, but divorce and sickness in families is an everyday occurrence in good times as well as bad. Don't get me wrong both seem to have reasonable reasons for filing and may be outstanding applicants otherwise, but...

You use any advantage you can get. If these guys were "un-hireable" before because of their bankruptcies and are now hireable because standards have changed, why does it matter that they didn't get there due to the economy?

NDCent
11-22-2011, 17:06
So because someone has a child born with a pre-existing medical condition and whom insurers will not touch or because an man/woman has a cheating spouse who goes binge spending for their new paramour and cleans out the joint bank account for their new life together; these unintentionally affected people are not qualified to be cops?

Would you extend your reasoning to everyone in traffic accidents, proposing that anyone involved a traffic accident has some contributive effort, as well?


I didn't pose the question, or write the disqualifiers, the OP mentioned. I simply stated that todays economic conditions didn't play a role in the scenarios he mentioned. I'm not saying whether filing for bankruptcy should, or shouldn't, disqualify a candidate. I'm simply saying that NOW allowing people that file for bankruptcy to be considered is doing an injustice to all those turned away before. That's the problem with unwritten guidelines. It was either a good/poor reason to disqualify all along, or it wasn't. :dunno:

PlasticGuy
11-22-2011, 17:43
Wait, bankruptcy equals corrupt cop?

I didn't say that. I said that it raises a red flag. First, is it the result of bad choices? Second, does it increase the chances of bribery or corruption? Maybe yes, maybe no, but it warrants further investigation.

NDCent
11-22-2011, 18:11
If what I posted earlier chafed a few then this should do much better.

IMO, filing for bankruptcy for the TWO reasons mentioned by the OP shows poor personal and financial decision making.

Someone made the decision to not only get married, but to put themselves and their spouse in a financial situation where a separation forced them to financially throw in the towel. People get divorced everyday and don't file bankruptcy, so apparently some bad decisions were made along the way.

In the other situation the candidates spouse was out of work due to illness for "a couple of months" a "portion" of which wasn't covered by PTO... so less than 2 months of lost income caused the candidate to file for bankruptcy. If you don't have more than a 2 month surplus of household income, much less one persons income, you're not making very good financial decisions and are living above your means.

Maybe bankruptcy is a poor reason to decline offering an employment position, that's up to the hiring organization to decide. But the excuses made by the candidates were poor. Just because they were trying to recover and improve their credit doesn't mean much, that's what they should be doing. I'm sure many people that file bankruptcy work at trying to turn their credit rating back around.

OXCOPS
11-22-2011, 22:03
I didn't say that. I said that it raises a red flag. First, is it the result of bad choices? Second, does it increase the chances of bribery or corruption? Maybe yes, maybe no, but it warrants further investigation.



Ah. Gotcha. And I agree that it does require more questions.

OXCOPS
11-22-2011, 22:07
If what I posted earlier chafed a few then this should do much better.

IMO, filing for bankruptcy for the TWO reasons mentioned by the OP shows poor personal and financial decision making.

Someone made the decision to not only get married, but to put themselves and their spouse in a financial situation where a separation forced them to financially throw in the towel. People get divorced everyday and don't file bankruptcy, so apparently some bad decisions were made along the way.

In the other situation the candidates spouse was out of work due to illness for "a couple of months" a "portion" of which wasn't covered by PTO... so less than 2 months of lost income caused the candidate to file for bankruptcy. If you don't have more than a 2 month surplus of household income, much less one persons income, you're not making very good financial decisions and are living above your means.

Maybe bankruptcy is a poor reason to decline offering an employment position, that's up to the hiring organization to decide. But the excuses made by the candidates were poor. Just because they were trying to recover and improve their credit doesn't mean much, that's what they should be doing. I'm sure many people that file bankruptcy work at trying to turn their credit rating back around.

Not always. Where I live, cost of living is high, but wages are low. With the average being 100, our cost of living (housing, food, fuel, etc.) scores about a 112. Our average income is roughly 89. Makes for less disposable income going into a savings account.

Hack
11-22-2011, 23:02
http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000525----000-.html

For those involved in personnel or human resources decisions concerning employees; candidates and applicants to any government agency, I suggest reading the following information within the link posted. If an applicant or candidate is denied a position solely due to said applicant's involvement with bankruptcy directly or by association with a person who is involved, (spouse, children, relatives), than the governmental agency denying employment for that reason and that reason alone could face legal action. The same is applied for personnel currently employed by any governmental agency.

As has been said, the totality of circumstances should be applied.

lawman800
11-23-2011, 00:30
http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000525----000-.html

For those involved in personnel or human resources decisions concerning employees; candidates and applicants to any government agency, I suggest reading the following information within the link posted. If an applicant or candidate is denied a position solely due to said applicant's involvement with bankruptcy directly or by association with a person who is involved, (spouse, children, relatives), than the governmental agency denying employment for that reason and that reason alone could face legal action. The same is applied for personnel currently employed by any governmental agency.

As has been said, the totality of circumstances should be applied.

Yes, I know that well. But a good reminder for those who may be involved in the chain going up on recommending a candidate whose regular assignment is not in personnel.

Sharky7
11-23-2011, 03:10
Sort of off topic, but sorta not...wasn't a major city in California trying to get financial records of officers applying for plain clothes units? How did that ever work out?

Mayhem like Me
11-23-2011, 08:46
Wait, bankruptcy equals corrupt cop?

No and you get sued if you use it as a sole DQ system....




trust me ... I sit on a hiring board.

lawman800
11-23-2011, 10:07
Sort of off topic, but sorta not...wasn't a major city in California trying to get financial records of officers applying for plain clothes units? How did that ever work out?

Court ruled it was an exception to the public records act. I will look for the legislative alert later.

Eta: Sorry, wrong topic. I was talking about the public trying to get officer pay records.

To answer your question, there is new legislation regarding the use of credit reports in hiring. It didn't change the rules much but basically, you have to show why it's job related and necessitated by the nature of the job. I have that alert as well and I'll find it for you too.

merlynusn
11-23-2011, 10:49
If what I posted earlier chafed a few then this should do much better.

IMO, filing for bankruptcy for the TWO reasons mentioned by the OP shows poor personal and financial decision making.

Someone made the decision to not only get married, but to put themselves and their spouse in a financial situation where a separation forced them to financially throw in the towel. People get divorced everyday and don't file bankruptcy, so apparently some bad decisions were made along the way.

In the other situation the candidates spouse was out of work due to illness for "a couple of months" a "portion" of which wasn't covered by PTO... so less than 2 months of lost income caused the candidate to file for bankruptcy. If you don't have more than a 2 month surplus of household income, much less one persons income, you're not making very good financial decisions and are living above your means.

Maybe bankruptcy is a poor reason to decline offering an employment position, that's up to the hiring organization to decide. But the excuses made by the candidates were poor. Just because they were trying to recover and improve their credit doesn't mean much, that's what they should be doing. I'm sure many people that file bankruptcy work at trying to turn their credit rating back around.

I'm going to disagree with you on this. First off, would you rather have someone get a divorce than be in a marriage that was a wreck and could cause much greater problems down the road? We have all known people who end up getting arrested for domestic violence instead of breaking up and going their separate ways.

Secondly, I don't have two months income saved up. Does that mean I am living above my means? Does that mean that my food bill hasn't increased by over 50% due to inflation while my wages haven't gone up? Does that mean my power bill hasn't gone up 15% while my pay has gone down due to increases in insurance fees?

Simply saying that because someone doesn't have months of spare income saved up they are living above their means is incorrect for the most part. Many people buy a house based on the combined household income and when one of those incomes is gone due to job loss or medical issues, etc, they get into a bind.

NDCent
11-23-2011, 12:23
I'm going to disagree with you on this. First off, would you rather have someone get a divorce than be in a marriage that was a wreck and could cause much greater problems down the road? We have all known people who end up getting arrested for domestic violence instead of breaking up and going their separate ways.

Secondly, I don't have two months income saved up. Does that mean I am living above my means? Does that mean that my food bill hasn't increased by over 50% due to inflation while my wages haven't gone up? Does that mean my power bill hasn't gone up 15% while my pay has gone down due to increases in insurance fees?

Simply saying that because someone doesn't have months of spare income saved up they are living above their means is incorrect for the most part. Many people buy a house based on the combined household income and when one of those incomes is gone due to job loss or medical issues, etc, they get into a bind.

If we all thought the same way it would be a boring world.

As far as divorce is concerned, have one, two, three, or more, whatever turns you on. But getting a divorce is not a valid reason for filing bankruptcy.

To me it doesn't matter if you make minimum wage or 6 figures a year, you should live within your means. A persons current salary doesn't change the fact they should have a reserve put back. If times are tough, then all the more reason you should have a reserve. If your expenses go up and your salary stays the same then you need to cut your cost of living expenses. Lose the cell phone, the cable, internet, the fast food stops, trips to the movies or dvd rentals, less trips to the range, etc. It's all about sacrificing wants vs. needs. Making the tough vs. comfort decisions comes with maturity, or should.

If someone sets themselves up to lose their house or vehicle if/when one person in the family loses a job or has a period of unemployment, then maybe they're spending too much on those items. I call it living above their means, you can call it getting into a bind, doesn't really matter. Maybe their first home won't have the white picket fence outside, but if they don't lose it by filing bankruptcy maybe they can eventually trade up for one that does.

Having an excuse means someones not accepting responsibility.

lawman800
11-23-2011, 12:43
I agree to a certain extent, but sometimes, things just go beyond what you can control or handle. I have the reserves and other contingencies set up. I cut costs over the last few years, saved about $700/month on car payments alone by changing cars (long story), and unloaded a few toys.

But I tell you it wasn't easy to get to that point on a fixed income. I had side businesses with a few good years that allowed me to save in chunks to get that put away. For those with only a salary, saving in small steps can take you a while to get the reserve you need.

Then all it takes is one thing to wipe that out (car breaks down, unexpected house repair, off duty injury, etc.) and you're back at square one, starting the small increment savings again.

The average American family was getting by with $50-100 a month leftover after all expenditures. Whether those expenditures are wants or needs, it is what it is.

Sharky7
11-23-2011, 12:51
If we all thought the same way it would be a boring world.

As far as divorce is concerned, have one, two, three, or more, whatever turns you on. But getting a divorce is not a valid reason for filing bankruptcy.

To me it doesn't matter if you make minimum wage or 6 figures a year, you should live within your means. A persons current salary doesn't change the fact they should have a reserve put back. If times are tough, then all the more reason you should have a reserve. If your expenses go up and your salary stays the same then you need to cut your cost of living expenses. Lose the cell phone, the cable, internet, the fast food stops, trips to the movies or dvd rentals, less trips to the range, etc. It's all about sacrificing wants vs. needs. Making the tough vs. comfort decisions comes with maturity, or should.

If someone sets themselves up to lose their house or vehicle if/when one person in the family loses a job or has a period of unemployment, then maybe they're spending too much on those items. I call it living above their means, you can call it getting into a bind, doesn't really matter. Maybe their first home won't have the white picket fence outside, but if they don't lose it by filing bankruptcy maybe they can eventually trade up for one that does.

Having an excuse means someones not accepting responsibility.

Normally, some of your argument makes a lot of sense in the 2005 world. The problem is that a some employers aren't just freezing pay, but they are cutting pay. Banks are not allowing refinancing when you owe more on the home then it is now worth. You could have purchased a home knowing you would be able to make the payments easily and now all of a sudden your pay gets cut by 25-30% and you have a kid born in 2008 right when the economy was taking a nose dive who was born premature and now has major health problems....throw in some car problems, needing to support an aging mother and father financially, etc.

I'm not ready to make blanket statements about an individuals finance in today's world.

NDCent
11-23-2011, 13:43
Normally, some of your argument makes a lot of sense in the 2005 world. The problem is that a some employers aren't just freezing pay, but they are cutting pay. Banks are not allowing refinancing when you owe more on the home then it is now worth. You could have purchased a home knowing you would be able to make the payments easily and now all of a sudden your pay gets cut by 25-30% and you have a kid born in 2008 right when the economy was taking a nose dive who was born premature and now has major health problems....throw in some car problems, needing to support an aging mother and father financially, etc.

I'm not ready to make blanket statements about an individuals finance in today's world.

I agree completely. With 2 years reserves put back something beyond our control could leave anyone bankrupt. But it's too easy nowdays to throw in the towel and say, oh well, I tried, time to start over. I know too many people that are a couple paychecks away from being delinquent. You can't prepare for every possible event, but making excuses comes easy for many. If you set yourself up for failure, you will probably get your wish.