How does Filing for Bankruptcy Affect Getting a Job?

| July 8, 2015

Are you facing bankruptcy? A common fear among those who face bankruptcy is the possibility that it will hinder the ability to find a job. What does a bankruptcy do to a job search? Do you need to worry? There isn’t exactly a cut-and-dry answer to this question, but there are several important facts worth knowing. Let’s talk about the relationship between bankruptcy and employment.

A candidate interviews after bankruptcy

Financial Discrimination

By law, your employer cannot discriminate against you due to bankruptcy. If your employer learns that you are going through a bankruptcy, they cannot fire you, demote you, or otherwise change your compensation because of it. This is against the law, and if it happens you should contact an Athens attorney. Some employers might look for other reasons to fire a bankrupt employee – tardiness, workplace behavior and so on. Firing someone for these reasons is not against the law, so these situations can quickly become legal quagmires if the employer is being unpleasant.

You should know that the discrimination laws pertain to your current employer. This has nothing to do with looking for employment, and does not affect the actions of potential employers. You can’t depend on it for protection on the job search.

Private Employers

A private employer is any hiring company or business that is not part of the government (there are other parts to that definition, but this is the important part). The average restaurant down the street or corporate office downtown is a private employer, no matter how big or small. These private employers can indeed make decisions about whether or not to hire you based on a bankruptcy. … if they know about it. Some employers will run basic background and financial checks, or outright ask people if they have had a bankruptcy. Bankruptcies stay on your financial record for up to 10 years.

If it comes down to a choice between someone with bankruptcy in their past and someone without one, many employers prefer to choose someone without a bankruptcy. Some businesses may not care, and some may take into account the time that has passed. However, it is not illegal for companies to make decisions this way.

Government Jobs

Public employers – those offering government jobs – are an entirely different story. These employers are bound by federal law to discount past bankruptcies when hiring employees. Not only does it not matter to public employers, it can’t matter. It’s part of a government effort to avoid any sort of discrimination. If you went through a bankruptcy and are struggling to find a job, then consider turning toward public employment: Your chances may be better in this market.

Security Clearances

Some jobs have security clearances for dealing with sensitive materials, armed forces, legal matters, kids and many other things where an extra “filter” is needed when hiring. Generally speaking, it may be more difficult for a person with a recent bankruptcy to apply to a job involving a security clearance. Keep this in mind when applying for jobs. On the plus side, the government may actually prefer giving security clearance to someone coming out of a bankruptcy because they are less likely to be a security risk via overwhelming debt.

If you have more questions about life after bankruptcy, contact Morgan & Morgan today. We can help you find your way.

Image Source: Pixabay


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