When people prepare to file for bankruptcy, their initial concern is how insolvency will affect their credit. Their next concern is how it can affect their future employment.
It’s safe to say that in most cases, filing for bankruptcy will not affect your current job at all. Your employer may not even learn about it unless your wages were being garnished (in which case they will be notified that the garnishment must stop) or you filed for Chapter 13 and you choose to have the monthly payments automatically withheld from your paycheck. Even in these situations, you cannot be fired, demoted, or subjected to a pay reduction because you sought bankruptcy relief.
It’s different when you’re applying for a new job. While no government employer is allowed to take your bankruptcy into account when deciding whether to hire you, there is no similar restriction on private employers. When they conduct a background check, they can legally refuse to hire you because you filed for bankruptcy, especially if the job is in the financial services industry or involves access to expensive merchandise, like jewelry.
So what can you do?
In many cases, honesty may be the best policy, especially if you know that the potential employer will be running a credit check and finding a reference to the bankruptcy. Many hiring managers may have experienced credit issues of their own in the past and can be more understanding if you ran into financial difficulties due to job loss, high medical bills, or a devastating divorce. They also want to hire someone who can be trusted, and being honest about your bankruptcy can put you in a favorable light.
According to the U.S. Courts website, an estimated 12.8 million consumers filed for bankruptcy between October 1, 2005, and September 30, 2017. Of these consumers, 68% filed for Chapter 7 while 32% filed for Chapter 13. It’s safe to assume that many of them sought and obtained new employment at some point before their filing dropped from their credit report. If you know that your bankruptcy will be discovered by a prospective employer, being honest could make you a contender for the job instead of eliminating you from the running.
Contact an Oklahoma Bankruptcy Attorney
Bankruptcy can affect different areas of your life. At the Law Offices of B. David Sisson, we explain how filing for Chapter 7 or 13 can impact your future employment as well as your credit score, so you can decide whether bankruptcy or another form of debt relief is in your best interests. For more information or to schedule a consultation with Attorney David Sisson, please contact us.