Millions of Americans file for bankruptcy protection each year, suggesting there is much less of a social stigma for filing bankruptcy than in the past, but the real question is whether or not filing bankruptcy could jeopardize your employment. The answer is…it depends.
Although there is no reason to publicize the fact you have filed bankruptcy, bankruptcy filings are public information, which means anyone who is curious may be able to access data about your bankruptcy filing simply by paying a nominal fee. The good news is most people won’t care, including employers. In fact, if most employers cared too much about whether or not their employees filed bankruptcy they might have trouble finding workers.
Will bankruptcy hurt my chances of finding employment?
Although some employers may not care if you have filed bankruptcy, there will be some who do. In fact, in this tough job market having poor credit can hurt your chances of finding a job. According to Society for Human Resource Management, about 13% of employers check credit reports for all job candidates and 47% check the credit reports for employees applying for selected job position.
Experts suggest, however, employers will be most concerned about poor credit and bankruptcy filings for candidates or employees who will be in a financial position where they have access to large sums of money, employees who will be in an executive-level position, or those who have access to other employees’ confidential information. It may also be tough to get certain positions with law enforcement because you could be viewed as a target for bribery.
What do I do if I have filed for bankruptcy?
Although employers may pull your credit report or ask about financial information during the interview process, Human Resource experts suggest this information is ranked lowest among criteria employers use to vet candidates.
With this in mind, employment experts suggest it is best to be honest and upfront about your current financial position and if you have filed for bankruptcy. It’s likely if you explain your financial situation your boss will be sympathetic. Over the last several years there are millions of workers who have had a medical crisis, divorce, sudden death or job loss which has put them in a precarious financial position and your boss may be one of them.
Do I provide employment information for my bankruptcy filing?
If you are currently employed and are not looking for a job it may not be necessary to tell anyone about your bankruptcy filing. Keep in mind, however, whether you file Chapter 7 or Chapter 13 you will have to provide information to the bankruptcy court about your employment including the name and address of your current employer, your current position, and the length of time you have worked at your current job.
If you file Chapter 13 bankruptcy you may also be required to have debt payments for your bankruptcy repayment plan directly withdrawn from your paycheck. In this case, your employer would be notified about your Chapter 13 filing so they can deduct your Chapter 13 debt payments from your paycheck and send it to your Chapter 13 bankruptcy trustee.
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