Can Bankruptcy Affect My Job and Employment Opportunities?
Bankruptcy is rarely anyone’s first plan of attack in eliminating debt. Cutting unnecessary expenses and taking on second jobs are all done in the hopes of meeting financial obligations. Despite sometimes heroic efforts, the weight of debt remains.
One reason many people delay filing for bankruptcy in Pennsylvania is a fear that filing will have negative repercussions at work. While an understandable worry, most employers will never know you filed.
Protections Against Bankruptcy Retaliation at Work
Employers cannot fire you simply because you filed for bankruptcy. Nor can they change any other work conditions. Your boss cannot reduce your pay or demote you. They cannot take away responsibilities. If they do, you might have grounds for a discrimination lawsuit.
Employers generally won’t know about a Chapter 7 bankruptcy filing unless you tell them. The only reason they would be formally notified is if you owe them money. In Chapter 7, you must list all your debts, and the creditors are notified about the filing. If you file for Chapter 13 bankruptcy, your employer may learn of the bankruptcy even if they are not one of your creditors. The court can issue a wage order that deducts your monthly Chapter 13 payment from your paycheck.
A skilled attorney at Scaringi Law can determine which bankruptcy chapter is appropriate for you.
Security Clearances & Professional Licenses
In most cases, a job that requires security clearance is not impacted by bankruptcy. In fact, filing for bankruptcy can be helpful. If you have a lot of debt, you are considered a high risk for blackmail. When you eliminate your debt through bankruptcy, your blackmail risk goes down.
If you hold a professional license in the financial industry, you might be required to disclose the bankruptcy filing. The specifics surrounding the bankruptcy are important. A license is rarely revoked based on bankruptcy alone.
The Effect of Bankruptcy on Future Employment
According to the Professional Background Screening Association (PBSA) and HR.com, 94% of employers conduct at least one type of background screening on prospective employees.
The top three reasons for conducting background checks are as follows:
- Protecting the safety of employees and customers (83%)
- Improving the quality of hires (51%)
- Mandated by law/regulations (40%)
Most employers wait until after a conditional job offer before conducting a background check. A background check will bring to light any criminal record, but that’s not all. Other information included in the screening includes employment history, education, motor vehicle record, and credit history.
It’s important to remember that a poor credit score and delinquent accounts might have as much or more negative weight as a bankruptcy filing.
Section 525 of the Bankruptcy Code prohibits government employers from refusing to hire someone just because they’ve filed bankruptcy. The law does not specifically offer the same protection with a private employer. Being honest and providing context can go a long way in ensuring your prospective employer that financial issues will not impact your work. Banking, payroll, and accounting jobs usually require workers with good credit scores.
The Positive Side of Bankruptcy
If you are considering bankruptcy, chances are you have been struggling financially for months or years. Your credit score is already poor. You don’t see a way to get ahead. Filing for bankruptcy can be viewed as a prudent, financially responsible step. In time, your credit will improve, and your bankruptcy filing will be far behind you. Bankruptcy can be a positive turning point to a more stable future.
Everyone’s situation is unique. Instead of dismissing bankruptcy for fear of how it will affect your employment future, reach out to Scaringi Law. Our Harrisburg attorneys have extensive experience in a wide range of bankruptcy cases. We can provide a preliminary evaluation and potential next steps for you to consider.
Call (717) 775-7195 to schedule a free initial consultation to discuss your financial circumstances.