Deciding to file for bankruptcy is a significant event that you may fear will affect your life in multiple ways. Among your likely concerns is the potential impact of bankruptcy on your present employment status and future job prospects. However, there is less reason to worry than you might think.
Generally, a personal bankruptcy should not affect your current employment. In the first place, your employer will not necessarily know that you’ve filed. There is no legal requirement to inform your employer of a Chapter 7 bankruptcy unless you have a security clearance or hold a professional license. (The situation is different in a Chapter 13, since you may be using payroll deductions to fund your repayment plan.)
Assuming that your employer has knowledge of your bankruptcy, there are federal law protections that apply. Employers are prohibited from discriminating against employees solely because they have filed for bankruptcy, currently or in the past. The employer can’t terminate you or take other adverse actions, such as a transfer to an undesirable job or a refusal to promote. If you believe your have been subjected to any such actions without valid justifications, you may have grounds for a lawsuit.
An employer may be justified in taking adverse actions if you have a security clearance or your job involves responsibilities relating to the company’s finances or other confidential data. However, this justification usually depends on showing a potential impact of the bankruptcy on business operations.
Federal law does not explicitly prohibit employers from discriminating against bankruptcy filers in the hiring process. It is common to conduct credit checks on job applicants as part of assessing whether they might be a risk of committing theft or fraud. A credit check includes bankruptcy court filings, which are public records. However, the Fair Credit Reporting Act (FCRA) mandates that an employer or potential employer obtain written permission before checking your credit.
A bankruptcy filing can make your job search more difficult. Employers might be hesitant to hire someone with a history of financial difficulty if the position sought involves handling money, valuable merchandise or sensitive information. The same is true of jobs in civil service, law enforcement, security firms and positions with fiduciary responsibilities
On the other hand, a bankruptcy case can be seen by employers for what it is — a way for the debtor to get a fresh start. A Chapter 7 bankruptcy discharges all or most or all of your debts, putting you in a better financial situation. In a Chapter 13, you reduce your debt and pay it off over three or five years while holding down a steady job. In both cases, you are acting responsibly to recover from money problems.
Jeff Field & Associates in Scottdale, Georgia provides reliable advice and effective representation in bankruptcy matters for clients throughout the Atlanta metropolitan area. To schedule an appointment, call us at 404-381-1278 or contact us online.
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