Will You Be Fired for Filing Bankruptcy?

When you’re dealing with overwhelming debt, you might be considering bankruptcy to get a fresh start. Many people find themselves facing bankruptcy at some point in their lives. However, a common concern is whether filing for bankruptcy will put your job at risk. Can you really be punished for using the law to seek debt relief?

This article looks at what employers will know about your bankruptcy, whether bankruptcy appears on background checks, the actions employers can and cannot take, and wage garnishments. If you have questions about bankruptcy and your rights, talk to a bankruptcy lawyer near you.

What Your Boss Can and Cannot Do About Your Bankruptcy

If your employer discovers your bankruptcy case, they may have concerns about your financial stability. But Federal law prohibits employers from taking any actions against you for that reason. That includes changing your job responsibilities or using your bankruptcy as a bargaining chip during salary negotiations. Your boss cannot demote or fire you based on this information. This law applies to both private employers and government employers and applies to your current employer as well as potential employers.

In some rare cases, bankruptcy might affect some jobs that require a security clearance or jobs that require professional licenses and may have different reporting requirements. A bankruptcy attorney can help you navigate this if you think these exceptions affect you.

What Your Boss Will Know About Your Bankruptcy

When you file for bankruptcy, it becomes a part of your financial history. If your case goes to bankruptcy court, then it will become part of the public record. This means that certain parties, including potential employers, can access this information under certain circumstances. However, it’s important to note that employers typically won’t know about your bankruptcy unless you specifically disclose it to them or they have a legitimate reason to conduct a credit check.

In most cases, employers don’t routinely check the credit histories of their employees or job applicants. Still, some positions, especially those in finance, government, or security-related industries, might require a credit check as part of the hiring process. Be sure to check the specific requirements of your desired job to understand if a credit check is part of the screening process.

Does Bankruptcy Appear on Background Checks?

Background checks are a part of many job applications these days. Whether your bankruptcy appears on a background check depends on the type of background check your potential employer conducts:

• Standard background checks focus on criminal history and may not include a credit report. A standard background check is unlikely to uncover your bankruptcy.
• Comprehensive background checks dive deeper and may include a credit report, which could reveal your bankruptcy filing.

So there may not be a way to stop a potential employer from finding out about your bankruptcy. However, even if they find out about it, they cannot use that information against you except in specific cases.

Get an Attorney’s Help

Filing for bankruptcy will not result in the loss of your job. It’s important to understand that there are legal protections in place to prevent unfair treatment based on your bankruptcy status. The U.S. Bankruptcy Code prohibits discrimination against people like you who file for bankruptcy.

If you believe you’ve been discriminated against due to your bankruptcy, you may have legal recourse. Talk to your bankruptcy attorney if you are suffering unfair punishment at work due to your financial problems. They may refer you to an employment lawyer who can take legal action to hold your boss accountable.