How Will Filing for Bankruptcy Affect My Job or Future Employment?
For many people, bankruptcy has the power to wipe out debt. But could it also wipe out your job? Debtors often erroneously believe that filing for bankruptcy will cost them their paycheck. This simply isn’t true, say bankruptcy experts.
In some cases, your employer will not even find out you filed for bankruptcy. While your creditors and cosigners will need to be notified of your bankruptcy filing, there’s no requirement to notify your boss.
Of course, there are still many instances in which your boss will discover your bankruptcy. The good news is that it shouldn’t affect your job. In fact, employers are legally prohibited from taking action against you because you’ve filed for bankruptcy.
Since the bankruptcy will be noted on your credit report, any prospective employer who requests a copy will be able to see that you filed. If a creditor has obtained a judgment against you to begin garnishing your wages, your current employer will be made aware of your bankruptcy when your bankruptcy filing puts a stop to the garnishment.
The type of bankruptcy you file for also influences whether your employer will find out. If you file for Chapter 13 bankruptcy, it’s much more likely that your boss will discover your bankruptcy, as the court may request that your Chapter 13 payments be automatically deducted from your paycheck.
Remember, even if your employer finds out about your bankruptcy filing, she cannot legally fire you – or discriminate against you by cutting your salary or reducing responsibilities, for instance – based on the fact that you filed for bankruptcy.
What about if you’re looking for work? In the public sector, you’re safe: Federal, state or local government agencies cannot consider your bankruptcy when deciding to hire you. Unfortunately, there’s no such law for private employers and many private sector companies will run a credit report check on applicants. But that certainly doesn’t mean you’re out of the game.
If you’re applying for a job, your best bet is to be honest and upfront about your bankruptcy – and the fact that it has allowed you to put your financial troubles behind you. For most people, bankruptcy offers a chance to get current on delinquent payments, get out of debt and move forward with a better credit score and stronger finances. In most cases, being open about your bankruptcy will outweigh any negative effects of the bankruptcy itself.
Wondering if bankruptcy is right for your personal financial situation? Contact DebtStoppers for your free one-on-one debt analysis today.