If you are considering filing a Chapter 7 or Chapter 13 bankruptcy, you may be wondering how the filing will affect your job. Many worry that they will be fired because of a bankruptcy. Others are concerned that potential employers may find out about a bankruptcy and deny them a job. While employers in very rare situations may find out about a bankruptcy filing since it’s a public record; it will virtually never impact your current employment.
Can My Employer Fire Me Because of a Bankruptcy?
Post-bankruptcy discrimination is a fear held by many individuals who are considering bankruptcy. No employer (government or private) is permitted by law to fire you because you filed bankruptcy. Furthermore, employers cannot take other actions against you (such as reducing your salary or demoting you) because you filed bankruptcy. However, if your employer has a valid reason to fire you, filing bankruptcy will not prevent you from losing your job.
If you have filed bankruptcy and are concerned that your employer may have taken illegal or discriminatory action against you, you should consult with an experienced lawyer to discuss your rights. An attorney can evaluate your situation and help you understand whether you have a claim against your employer.
Will My Employer Know About My Bankruptcy?
If you file a Chapter 7 bankruptcy, it is unlikely that your employer will find out about your bankruptcy. However, an employer will often find out if a creditor has sued you because that judgment creditor will likely serve your employer with a earnings withholding order (wage garnishment). One reason people file bankruptcy is because bankruptcy stops wage garnishment. If you file bankruptcy after a creditor has started garnishing your wages, then your employer will obviously be notified about the bankruptcy in order to stop the garnishment.
A Chapter 13 bankruptcy differs from a Chapter 7 bankruptcy in many ways. Primarily, debtors in a Chapter 13 are repaying their creditors in some portion over time. On occasion, an employer will learn that an employee is in the midst of repaying creditors in a Chapter 13 because the debtor has exercised the option to have the monthly Chapter 13 payment deducted directly from his or her paycheck. This is an option debtors have in a Chapter 13 which simply makes it easier to ensure the monthly payment to the Chapter 13 Trustee is made on time each month without any complication. Much like setting a car payment to auto-debit each month, these automatic withdrawals are controlled by the debtor and can be turned on and off at the debtor’s discretion.
Applying for Jobs After a Bankruptcy
If you have applied for a job at a federal, state, or local government agency, your bankruptcy cannot be taken into consideration for the purposes of deciding whether or not to hire you. Job applications, interviews, etc. in the private sector very rarely delve into whether or not an applicant has filed bankruptcy in the past. However, there are jobs which will be more difficult to acquire if the applicant has filed bankruptcy in the past; typically those that require licensure AND dealing with large sums of other parties’ money. (such as stockbrokers and certain high finance jobs).
When you apply for a job, a private employer may conduct a credit check before hiring you. Your credit report will reveal that you have filed bankruptcy. It is important to understand that you can refuse an employer’s request to run a credit check. Employers need your permission before doing so. Unfortunately, employers can refuse to hire you if you do not consent to a credit check. If you have applied for a job and a potential employer asks for your permission to run a credit check, you should consider speaking truthfully about what the employer will discover upon running it. There is a likelihood that the potential employer will understand your past troubles and will appreciate your honesty.
If you are considering bankruptcy, you should speak with an experienced attorney. For a free and confidential consultation with a bankruptcy lawyer serving all cities in Southern California, call (714) 731-7595.
image courtesy of flickr user photoloni