Well-Paid Public Employees Now Looking to Chapter 7 as a Solution

Public employees have long enjoyed good salaries and benefits from their jobs, thus typically making them ineligible for the Chapter 7 process. However, a recent report from PR Newswire says that may be changing as more and more governmental entities look for ways to cut costs. The consequence for governmental employees is filing for bankruptcy, according to the report.

Teachers, firefighters, police officers and other state and local employees have experienced pay cuts at all levels. In addition to the pay cuts, governments are making employees pay more for their health insurance and retirement benefits. The employer would typically cover these costs in the past.

In addition, governments are enacting wage freezes on employees. This means that teachers are taking on bigger classes and some workers are working extra hours without overtime pay. While these approaches may save money for the employer, the public employees are turning to Chapter 7 as a solution once unavailable to them.

PR Newswire’s report noted a bankruptcy attorney who had a well-paid teacher tell him she had not received a pay raise in years, and about half of her paycheck goes toward deductions now. The attorney said she is now eligible for Chapter 7 bankruptcy.

Law Firm of Kevin D. Judd – Maryland bankruptcy attorney



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