Does Filing For Bankruptcy Affect My Employment Now and in the Future?

If you find yourself at a point where bankruptcy feels like the only way forward, you’re probably pretty focused on the here-and-now. At the same time though, you could also be wondering if or how a bankruptcy record could affect your future employment opportunities. Both are valid concerns, and taking a comprehensive approach to your current and future financial and employment situation is always a good idea. But before you get overwhelmed, know that with some steady legal advice and a professional by your side, you can successfully navigate through.

How Bankruptcy Affects You Now

Before filing for a chapter 7 or chapter 13 bankruptcy, you could be concerned about how it will impact your employability. In general, bankruptcy shouldn’t have a detrimental effect on your current employment situation. 

More often than not, your employer will not even be aware of your financial situation if you file for a chapter 7 bankruptcy, due to the nature of the process. If you file for a chapter 13 bankruptcy on the other hand, it’s likely that the Court will require automatic payments be deducted from your wages in order to repay creditors. In that case, there is always a possibility that your boss could find out about the bankruptcy from whoever handles payroll. This could be especially true if you work for a small, tight-knit company. 

But no matter the size, type, or sector of the business, no employer has the right to discriminate against you in any way due to their knowledge of your bankruptcy case. This is per the official U.S. bankruptcy code.

Actions that would indicate discrimination could include:

• Demotion
• Pay cut
• Schedule change
• Hour reduction
• Removal of responsibilities
• Termination

If your employer takes any of these actions without being prompted by some action on your part–i.e. disrespect, tardiness, dishonesty, or incompetence–then it is worth discussing the situation with a trusted attorney. If there is clearly biased or discriminatory behavior at play, you could have a case against your employer. Bankruptcy is a responsible way to tackle otherwise insurmountable debt, and that decision should not be met with any harsh backlash.

If you have a reasonable suspicion that your employer is looking to terminate your employment after learning about your bankruptcy, be sure to remain respectful and dutiful, not giving them any just cause to do so. However, if you do act appropriately and still suffer job loss, it is again worthwhile to take up the matter with an experienced bankruptcy attorney.

How Bankruptcy Affects Future Job Opportunities

Federal, local, and state employers are prohibited from any type of hiring discrimination based on your financial situation, be it a recent bankruptcy filing or any other evidence of debt that surfaces in your background check or credit history. However, this rule does not apply to private companies. 

While we hope that private sector employers would give folks the benefit of the doubt and seek to uplift their communities, we can’t dictate what they might do. Perhaps they’ve hired someone in a similar situation in the past and their business suffered because of it. Regardless, if a potential employer learns of your bankruptcy and chooses not to hire you for a position that deals with responsible management of assets–i.e. accounting or payroll, handling cash or valuable merchandise–then that is ultimately their decision to make. They can also refuse to hire you if you won’t give permission for a credit history check.

In most cases, it’s good to know that bankruptcy will not affect your current employment or your future dream job. That said, we cannot vouch for every employer out there. If it does come up, definitely be honest about what happened––provide reasons, not excuses, and show how you overcame the difficulty. Being honest and providing a relevant context can take your story from data on a report to a relatable situation. Many fellow Americans and Ohioans have been in your position.

Your best bet is to work with an experienced bankruptcy attorney, who can field any and all questions regarding bankruptcy and employment and help you to work through situations that might arise. 

Special Situations

Both governmental agencies and some private companies require that employees have some form of security clearance. At first thought, you might be concerned that if you work in these areas or hope to someday, that a bankruptcy will stain your record. But sometimes, the opposite is true. 

Because excessive debt can lead an individual to be more likely to make compromises or fall victim to blackmail, the fact that you have taken debt head-on via a bankruptcy filing can actually be seen as a protection and a good mark on your character. This is just one case in which your initiative to get a handle on your debt can serve you well in the job market. At the same time, it’s often the root cause of your perceived financial irresponsibility that might come into play, not the bankruptcy itself. Financial trouble due to medical bills or a divorce will always be seen in a more understanding light than debt incurred due to some sort of addiction. While in general this sort of information isn’t divulged to potential employers, positions that require a security clearance will have access to this data.

Partner With a Local Ohio Bankruptcy Lawyer

Navigating the waters of a bankruptcy can feel daunting, especially when you’re also worried about keeping or securing employment. Maintaining your current position could be vital to helping you overcome debt. If you’re at a crossroads and not sure how to turn, know that putting in effort and sacrificing to achieve a more secure financial situation is always worth it. And know too that you’ll always have an advocate in us. 

If you need advice and answers to your burning bankruptcy questions, get in touch with the trusted chapter 7 bankruptcy lawyers at Hausen Law, LLC. James F. Hausen has used his well-honed skills to handle over 2,000 cases, serving the Akron and Canton areas. Contact Northeast Ohio Bankruptcy Attorneys to set up a free consultation and learn more about your bankruptcy options and employment rights.