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Bankruptcy And Your Future Employment

If you’re considering filing for bankruptcy, you might be worrying about how it will affect your future employment. You may be worried that your current employer will find out about your bankruptcy filing and fire you. You may also be worried that you will never get a job again. While some of your fears may have some basis, rest assured that in many instances your bankruptcy won’t affect your current or future employment.

Will I lose my current job? The answer is no. Your employer, whether private or public, cannot fire, demote, or punish you simply because you filed for bankruptcy. It’s against the law.  You might actually be a better employee after the bankruptcy because you can focus on your job instead of worrying about your debt.

Will my employer find out that I filed for bankruptcy? Probably not, if you filed under Chapter 7. Even though bankruptcy is a public proceeding, employers are not automatically provided information about Chapter 7 filings. However, if a creditor has sued you, obtained a judgment, and garnished your wages, your employer already knows about your debt situation.  When you file bankruptcy, garnishments are stopped and the employer will be ordered by the court to stop taking the garnishment from your check.  If you filed under Chapter 13, your employer will likely learn of your filing because the court may order your reorganization payments to be automatically deducted from your wages.

Will bankruptcy affect me when I apply for a new job? The answer here depends upon what kind of job you’re applying for. Federal, state and local governments can’t take your bankruptcy filing into account when deciding which applicant to hire. However, private employers may take your credit history into account, and you may be denied a job due to your bankruptcy filing. On the other hand, if you do not clean up your credit through bankruptcy, you might not get the job due to your debt and payment history.  This is especially true if the job you’re applying for requires you to deal with money, such as a bookkeeping, accounting or payroll position. Your best bet in this situation is to be candid with your potential employer and explain the circumstances that led to your bankruptcy. Bankruptcy may also negatively affect your ability to obtain certain professional licenses.

In sum, your bankruptcy filing may have an impact on your future employment. An experienced bankruptcy attorney can help you navigate your options to determine what is best for you.

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