How Does Bankruptcy Impact My Employment Opportunities?

Fearing that a bankruptcy will negatively impact employment opportunities is one of the main reasons some people avoid filing. However, bankruptcy doesn’t automatically mean the end of good paying jobs. Here’s what you need to know about how bankruptcy impacts employment opportunities.

You Can’t Be Fired

Whether you file a Chapter 7 or a Chapter 13 bankruptcy, your employer is prohibited from firing you because of it.  However, they can fire you for other valid reasons i.e., tardiness, incompetence, breaking the rules of the workplace. For those who filed bankruptcy after a wage garnishment, filing bankruptcy may actually relieve some of the workplace tension surrounding their finances, because their employer will no longer be responsible for collecting money on behalf of creditors.

It’s also important to remember that although bankruptcy is part of the public record, you are not required to reveal your bankruptcy case to your employer.

Impact on Job Search

There are a few things you should consider when looking for work after filing bankruptcy.

  • Some employers do a credit check and will see your bankruptcy on your credit report.
  • No government agency can automatically deny you employment because of a bankruptcy.
  • Private industry may deny you employment because of a bankruptcy if they have good cause. For example, if the job would require you to manage money, your bankruptcy might be perceived as a negative.
  • In most cases, neither private nor government employers will deny you employment because of a bankruptcy. Since so many people file bankruptcy exclusion based on that one factor would mean excluding many otherwise competent candidates.
  • The older your bankruptcy, the less likely it will have an impact on your job search.

Security Clearance

If you’re working for (or seeking) a job that requires a security clearance, your bankruptcy may actually work in your favor. Certain jobs at the CIA or FBI may be difficult to get if you have a lot of debt because it would make it more likely that you would be tempted by bribes. However, since bankruptcy wipes out your debts, chances of you being bribed decreases.

Reprinted with permission of Bethany Lape – September 11, 2015

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