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The iconic American food company, Hostess, has announced that a judge has approved a plan to close the company. Lovers of such products as Twinkies, Wonder Bread and Drake’s snacks are clamoring to buy their beloved favorites before they possibly disappear forever. This development marks the end of 82 years of conducting business. It also, however, may mark the beginning of a difficult time for many Hostess employees.

Hostess has closed down its 33 remaining bakeries as a part of its Chapter 11 bankruptcy proceedings, leaving some 15,000 employees suddenly facing unemployment. Here in Kansas, more than 700 employees work at the Hostess bakeries in Lenexa and Emporia alone. They and other Hostess employees will not be paid for their unused vacation time and will receive no severance pay, according to the company.

Questions over striking employees’ eligibility for unemployment benefits in Kansas are unresolved. And although the bankruptcy will not affect employees’ 401(k) funds already invested, the company’s defined-benefit pension plan will be terminated.

Some of Hostess’ production workers earned as much as $20 per hour with medical benefits. But the chances of former Hostess employees finding work in the same field with competitors, or even with companies that might buy up the existing plants, reportedly are slim, as the industry has yet to fully recover all of the jobs it shed during the recession.

While Hostess is the latest and largest profile business to leave former employees to fend for themselves in a struggling economy, it is neither the first, nor will it be the last to do so. Unexpected life changes like unemployment force individuals to make difficult choices in dealing with financial challenges. Credit card debt can pile up; a mortgage going unpaid may lead to the threat of foreclosure.

Bankruptcy, however, can protect unemployed individuals and their families and provide relief from debt. Chapter 7 bankruptcy offers a fresh financial start, discharging most types of unsecured debt. When an employer goes under, its former employees should consider all of their options in dealing with the financial challenges that may lay ahead.

Source: CNNMoney, “Hostess closing OK’d by Judge,” Chris Isidore and James O’Toole, Nov. 21, 2012; The Kansas City Star, “Uncertain future for Hostess employees as bakeries shut down,” Diane Stafford, Nov. 16, 2012