Will Bankruptcy Harm My Career or Employment Prospects?

Varying Impacts

Hi, I'm Dave Steinberg. I'm an attorney, and one of the areas I practice is bankruptcy. In this video I'll answer 6 questions I'm often asked about the effect of bankruptcy on employment.

Fear that bankruptcy will lead to loss of a job or job opportunities is one reason people avoid filing. This fear is largely unwarranted. Bankruptcy does not mean the end of employment or good-paying jobs.

1. Will My Employer Find Out About My Bankruptcy?

Your employer may never know about your bankruptcy unless your paycheck is being garnished or you owe your employer money. After you file, your employer will receive a notice from the bankruptcy court to stop the garnishment and all debt-collection efforts while your bankruptcy is pending.

If you file a Chapter 13 bankruptcy, your employer will learn of your bankruptcy if the court orders your plan payments to be deducted from your pay. If you are applying for a new job a prospective employer may require you to submit to a credit check which will reveal your bankruptcy. Bankruptcy remains on your credit report for 7-10 years.

2. Can My Employer Fire Me or Retaliate Against Me After Learning About My Bankruptcy?

Bankruptcy law prohibits your current employer from firing you because of a bankruptcy. The law also prohibits other forms of retaliation, such as denying you a raise or promotion, demoting you, or cutting your pay. Bankruptcy law will not prevent you from being terminated for poor performance, violating company rules, or because the company downsizes for legitimate business reasons.

3. Can a Prospective Employer Refuse to Hire Me Because I Have Filed for Bankruptcy?

If you are applying for a government job, the answer is no. No government agency, whether federal, state, or local, can refuse to hire you because of your bankruptcy.

Unfortunately, private employers do have the right to deny your employment because of a bankruptcy. Most companies are interested in your credit history only if the position requires you to handle cash or manage financial responsibilities. Even then, bankruptcy is not necessarily a barrier to employment. The older your bankruptcy, the less likely it will have an impact on your job search.

4. Will Bankruptcy Prevent Me From Getting or Renewing My Professional License?

Bankruptcy will not put your professional or occupational license at risk. You may not be denied a license solely because of bankruptcy.

5. Will Bankruptcy Prevent Me from getting a security clearance?

Financial mismanagement is one common reason why security clearances are denied or revoked. People with excessive debt pose a security risk because they are susceptible to bribery or blackmail. They can be pressured to trade government secrets for money. Filing bankruptcy will usually improve your chances of getting or keeping a security clearance. Eliminating your debt will make you less vulnerable to corrupting influences.

6. How Can I Improve My Chances of Getting Hired if I Have a Bankruptcy on My Credit Report?

When you know your bankruptcy is going to show up on a credit check, talk to the prospective employer before the results come in. Prepare a brief explanation of why you filed and how you have regained financial stability.

Employers might see someone who filed for bankruptcy as a risky hire. One way to offset that is to provide quality personal and professional references that the potential employer may contact. It's the best way to show that you are trustworthy.

In summation:

1. Your current employer cannot fire or demote you, cut your pay, or deny you a raise or promotion because you have filed for bankruptcy.
2. If your job requires a professional license, bankruptcy will not jeopardize it.
3. If your job requires a security clearance, bankruptcy will usually put you in a better position to obtain one than not filing.
4. A government employer cannot refuse to hire you. A private employer may decline to hire you because of a bankruptcy. But, an employer is not likely to care about your bankruptcy unless you're applying for a job that involves money and financial responsibilities.

I am available to discuss your situation. You may contact me at 301-589-4597.

If you're ready to take back control of your finances, call 301-589-4597 or email me at ds@dsteinlaw.com to discuss your options. I offer free consultations to those enduring severe financial strain in Maryland and Washington D.C., including areas around Baltimore, Bethesda, Silver Spring, Gaithersburg, Rockville, Wheaton, Upper Marlboro, Bowie, College Park, Laurel, Frederick, Hagerstown, Hyattsville, Salisbury, Towson and Glen Burnie. Let me help you make a new start today.