Can Bankruptcy Affect Your Job? What Filers Need To Know

Whether you are looking for a job or just looking to hold on to the job you have, you may be wondering if filing for bankruptcy will have a major impact. Read below to find out why this is not a simple question to answer.

Looking for Work

A lot of employers run background checks on prospective employees as part of the screening process. However, whether the background check includes a credit check depends on the type of job you are applying for. It's common that jobs in the financial sector require a credit check. You must provide express permission for such a check to take place. It's important to note that a credit check will also reveal late payments, collection activity, judgments, and more whether you file for bankruptcy or not.

It's not common for jobs that don't involve money to require a credit check. One exception is government or private sector jobs that require passing a security clearance investigation that may include a credit check. Two takeaways from this include:

• The sooner you file for bankruptcy, the lower the impact on your credit report.
• Look for jobs in areas that do not involve handling money.
• If you do have a bankruptcy and desire such a job, consider providing an explanation to your prospective employer. Declaring bankruptcy due to medical bills or student loan debt is a lot different than doing so because you made unwise credit card decisions.

Fired for Declaring?

Your employer is not likely to know about your bankruptcy in most cases. You don't have to inform your employer of your filing and only a few situations would call for them knowing. One issue might be if you file for chapter 13 and must make payments for your debts directly from your paycheck. Then the accounting division might be aware of the filing.

Another issue is for those that need to retain a security clearance to do their job. When it comes time to have that clearance recertified, the information may come out. However, bankruptcy is not reason enough alone to stop you from getting your clearance approved. Again, the reason for your bankruptcy can come into play. Issues like a gambling addiction could impact your security clearance while just being unable to pay your bills won't be as much of an issue.

Finally, those who hold certain financial certifications might have to disclose bankruptcy to their certifying board, but it's not an automatic denial of certification alone.

As you can see, it's all about the justification for filing for anyone affected because of their job. Speak to a chapter 13 bankruptcy lawyer and find out more.