Can Bankruptcy Affect Your Job?

Many people believe that there is a stigma to filing for bankruptcy, and they fear that others might think they are irresponsible or taking advantage of the system. While there are many valid reasons that people file bankruptcy that are beyond their control, it is still natural to wonder whether bankruptcy might affect your relationships – both personal and professional. A common question that arises is: will bankruptcy affect your job?

Your Current Job

There are different ways that employers regularly learn that employees have filed for bankruptcy:

• You had a wage garnishment – Bankruptcy stops your wage garnishment, and your employer will receive notice to stop garnishing your wages as a result of your bankruptcy filing.
• You filed for Chapter 13 – In some cases, Chapter 13 payments will be automatically deducted from your paycheck, so your employer will know you are in a bankruptcy repayment plan.

• You took a loan from your employer – You would have to list this loan on the bankruptcy petition, and your employer would receive notice of the case.

Even if your employer learns about your bankruptcy, they are prohibited from firing you solely because of the bankruptcy case. They also cannot lower your pay or change the conditions of your employment if the bankruptcy is the only reason.

Job Applications

Some employers conduct credit checks on applicants before they will make a job offer. They need your consent to do so, but a refusal will often result in being passed over for the job. A credit check will reveal a past bankruptcy, and it might affect your chances. While government employers cannot refuse to hire you because of bankruptcy, private employers have the right to do so. This can be common if a job involves handling money or other financial decision, though being honest and upfront about your bankruptcy can help your position. This gives you the opportunity to explain your reasons for the case and that it was not simply due to a lack of financial management or responsibility.

Security Clearances and Professional Licenses

You will have a background check if you are seeking a security clearance or a professional license. The government agency or licensing board will learn of your bankruptcy, though it does not mean your clearance or license will be denied. In some situations, filing for bankruptcy when you cannot pay your debts is seen as a responsible choice rather than simply ignoring your obligations. However, if you have other negative factors on your application, a bankruptcy might not help the situation.

Learn About the Effects of a Possible Case from a Northwest Indiana Bankruptcy Attorney

Overall, bankruptcy generally does little to impact careers, though it is important to understand the possibility. Whitten & Whitten meets with potential clients and can advise of the many possible implications of a bankruptcy case – both positive and negative. If you are struggling with overwhelming debt, you should not wait to learn about your options. Contact us for a consultation today.