Filling for bankruptcy is a major financial decision that can impact all aspects of your finances. But, because of the way bankruptcy protection works, you can also be affected when other people file for bankruptcy, too. Here's a look at how and what you can do about it.

When a Business Files for Bankruptcy

Companies of all sizes file bankruptcy, and that move can affect employees, consumers and the community at large.

A recent article from mlive.com recounts the story of former Delphi employees who were receiving workers' compensation benefits. Since the firm's bankruptcy filing in 2005, though, the group responsible for those payments is in question, meaning that many intended recipients aren't getting their checks.

• Contact a lawyer. If you aren’t sure about your rights or the benefits you’re entitled to, it may be a good idea to have a bankruptcy attorney on your side to ensure that someone is looking out for your best interest.
• Know when you still pay. If you owe money to a company (say, for purchases on an installment plan or a store credit card) that has filed bankruptcy, you may still be responsible for that debt.
• Know when you don't pay. If you bought something like an extended warranty or service plan from a company that has declared bankruptcy, you may be entitled to a refund for part or all of that purchase. It often depends on which type of bankruptcy protection the company enters.

When a Friend Files for Bankruptcy

If a friend or family member files for bankruptcy, you could be affected in a variety of ways, depending on your financial relationship with that person.

• Cosigners: If you co-signed a loan for a person who files Chapter 7 bankruptcy, you may still be responsible for making payments on that loan. In a Chapter 13 bankruptcy, cosigners are often protected. However, it's important to recognize the financial implications of consigning a loan.
• Former spouses: If an ex files for bankruptcy protection, you may be responsible for loans that the two of you initiated together; however, your spouse may still be responsible for child support and maintenance (alimony) payments, since these are typically not dischargeable in bankruptcy court.
• Current spouse: If either you or your spouse decides to file for bankruptcy, it's important to decide whether you'll do so jointly or individually. A local attorney can help you make the final decision, which is usually influenced by factors such as the amount of community property you have and how your debt is allocated.