Can You Lose Your Job For Filing Bankruptcy
Your company cant fire you, demote you, or take any kind of action against you just because of a bankruptcy. Your employer is also banned from discriminating against you because your spouse has filed. However, your employer could potentially fire or demote you if they think you behaved irresponsibly or unethically in acquiring the debt and that it is impacting your work as an employee.
The reality is that discrimination can be difficult to prove. If your employer fires you after discovering your bankruptcy but says you were dismissed due to subpar job performance, it could be tough to show that you were wrongfully terminated.
Bankruptcy And Immigration Status
If you are a legal resident in America and want to file for bankruptcy, then you can.
You do not need to be a U.S. Citizen, or have a green card to file bankruptcy in the United States.
A U.S. bankruptcy is also effective against creditors outside of the United States.
There is no law that says that filing for bankruptcy will prevent the United States Citizenship and Immigration Services from approving your visa, green card, or citizenship application.
However, filing a bankruptcy can potentially affect your immigration status in a few ways.
Please note, I am writing this article from the perspective of a Minnesota bankruptcy attorney, and do not have a background in immigration law.
Should you need legal advice regarding immigration, then you should seek the advice of a Minnesota immigration attorney.
Im Renting Will Bankruptcy Affect This
There may be a clause in your Tenancy Agreement which allows your landlord to end it if you are made bankrupt. If you live in council or housing association property, it is extremely unlikely that you will lose your home. If you are renting privately, your landlord is highly likely to want to keep you as a tenant after all, if you have managed to keep paying the rent so far despite your other debts! It is a rare landlord who would prefer to get rid of a good tenant and have to look for a new one.
Renting somewhere new when you are bankrupt can be difficult because you will fail any credit check. But if your credit rating is already very poor, going bankrupt may not make much difference!
There are four ways around this sort of problem: find somewhere to rent privately, not through a letting agent, as landlords can apply common sense to your situation whereas letting agents normally have no discretion get a guarantor have a very large deposit or delay your bankruptcy until after you have moved.
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What Happens When You Go Bankrupt
If the adjudicator makes you bankrupt:
- youll receive a copy of the bankruptcy order and may be interviewed about your situation
- your assets can be used to pay your debts
- youll have to follow the bankruptcy restrictions
- your name and details will be published in the Individual Insolvency Register
You can apply to have your address removed from the Individual Insolvency Register if publishing it will put you at risk of violence. This will not affect your bankruptcy.
After 12 months youre usually released from your bankruptcy restrictions and debts. Assets that were part of your estate during the bankruptcy period can still be used to pay your debts.
You might be able to cancel your bankruptcy before youre discharged.
Bankruptcy only applies to individuals. Find out what your options are if your limited company cannot pay its creditors.
What If You Commit Bankruptcy Crime
If you are convicted of a bankruptcy crime:
- You can face jail time and a denial of your bankruptcy discharge
- You could be removed from the US and barred from re-entry for many years or even life
People very rarely commit bankruptcy crimes because the bankruptcy system relies on all parties to be completely honest and provide all relevant information.
In addition, around 1 in 250 people are subjected to a bankruptcy audit.
We have helped over 40,000 people file bankruptcy in Minnesota since 1977.
Rest assured:
- Walker & Walker Law Offices, PLLC has never had a client charged with or convicted of bankruptcy crimes
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Will Marrying Someone Who Filed Bankruptcy Affect Your Credit
The short answer is no. Marrying someone doesn’t merge your credit report with theirs. You’ll both maintain credit histories and credit scores independent of one another, and derogatory marks on an account won’t affect the other spouse’s credit unless that account is held jointly.
Their record will not be added to yours or directly impact your credit scoreand vice versa. In fact, your marital status will not even show up on your credit report, nor will it affect your credit scores.
Spouses are also not responsible for individual debts their partners incurred before marriage. If you live in a community property state, however, you will have an equal obligation to repay any debt your spouse incurs while you are married. Even if your name isn’t on the account, creditors can pursue your assets in debt collection efforts.
Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Married couples in Alaska can opt in to community responsibility.
How Can You Prepare For A Credit Check By A Potential Employer
Since employers are mainly checking to see any patterns or habits of mismanaging money when they conduct a credit check, the best way to prepare is to know what your credit report says before applying to any job .
“You certainly don’t want to be surprised when you go apply for a job to learn something negative is on your credit reports,” Ulzheimer says. “I always advise people who are job hunting to get a good idea of what your credit reports looks like well in advance. And, be able to explain any negative entries.”
Every year, you’re entitled to one free credit report from each of the main credit bureaus Experian, Equifax and TransUnion. You can access these reports for free at annualcreditreport.com, which is authorized by federal law. We recommend you don’t access all three reports at the same time, but instead space one report out every four months.
If you have a Capital One credit card, such as the Capital One Venture Rewards Credit Card or Capital One Savor Cash Rewards Credit Card, you may have come across CreditWise . provides access to your free TransUnion credit report.
Keep in mind that while employers can legally pull your credit report, it’s one of many factors that go into getting hired for a new job. But there is a simple way to appear just as good on your credit report as you do in your job interview: Make sure you always pay your bills on time.
Editorial Note:
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Options If You Think Bankruptcy Will Affect Your Job
Your employment contract may not have a specific reference to Bankruptcy. However there might be a clause which says that your employment can be terminated if you become insolvent.
The important word here is may. This gives your employer the option to terminate. However it does not mean they will. If you are concerned about the implications of any clause in your contract you should speak to your Manager or HR department.
Where you decide that bankruptcy will have a negative impact on your job you may have to avoid the solution entirely. You will then need to consider one of the alternative debt solutions.
Contact us if you think bankruptcy will affect your job and you want to discuss the options.
Protection Extends To Discriminatory Actions
The law also prohibits discrimination with respect to your employment, or the employment of anyone associated with you, because of your bankruptcy. While this does not necessarily cover hiring decisions, it does mean that if you are already employed, you can’t be treated differently just because you filed for bankruptcy. For example:
- If you were in line for a promotion or a raise and you are denied just because you filed for bankruptcy, it is a violation of the law.
- It is also a violation if you are demoted or your salary is lowered because of the bankruptcy filing.
It doesn’t matter if you work for a government agency or a private company. The law applies to both.
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Can I Get A Mortgage Afterwards
It will be harder and you should assume that you will need a larger deposit than someone on the same income who has not been bankrupt. Read the page on Bankruptcy and your Credit Rating for a more detailed explanation. ]
The other insolvency options all have the same effect on your chance of getting a mortgage in future.
But also step back and ask yourself whether you have any chance of getting a mortgage if you dont go bankrupt.
If you arent that young, or you dont have a well-paid job and you live in an expensive part of the country, then owning your own house may just be a dream with no real chance of ever happening. Dont let this sort of wishful thinking stop you taking the necessary measures to deal with your debts.
Why Would A Potential Employer Look At Your Credit
More than half of employers conduct background checks during the hiring process only, and the No. 1 reason is to protect their employees and customers, says the 2018 HR.com report.
For security purposes, the credit report can be used to verify someone’s identity, background and education, to prevent theft or embezzlement and to see the candidate’s previous employers . For employers, it is a big picture snapshot of how a potential candidate handles their responsibilities.
“Credit reports indicate whether or not you’re responsible,” financial expert John Ulzheimer, formerly of FICO and Equifax, tells CNBC Select. “And, they also indicate if you’re in financial distress. These are attributes that are important to employers. For example, would you want to hire someone in your accounting department who can’t manage their own obligations?”
If an employer is running a credit check on you, it is most likely only after they already made a decision to hire you, and it is usually the last thing they check. Since pulling credit checks cost employers both time and money , credit checks aren’t necessarily used to weed out a big pool of potential applicants and not all applicants will have their credit checked.
Employers are more likely to run a credit check for candidates applying for financial roles within a company or any position that requires handling of money .
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Does An Employer Credit Check Hurt Your Credit Score
Your credit score won’t be affected by a potential employer conducting a credit check on you.
“An employment inquiry is treated like a soft inquiry,” Ulzheimer says. “Not visible to other parties and not considered in credit scoring systems.”
According to the 2018 HR.com report, employers typically assess applicants based on their long-term credit history four to seven years overall unlike lenders. That means if there is a big discrepancy from a few years ago, an employer may still ask you about it even if your most recent credit history is healthy.
Will My Partner Have To Pay For The Debt If I Go Bankrupt
In a bankruptcy debts cannot be passed to someone else, if any of the debts were in joint names, or had a guarantor, then the other person would be pursued for their liability for the debt.
There are circumstances, where your partner will be liable for your debt. For example, if you have arrears on your council tax, then the council will make your partner fully responsible for all the arrears . The council will no longer be able to chase the bankruptee for money.
The bankrupt has no further liability for the council tax debt. However, the council is still owed the money and the debt still exists. At that point, the council will look for anyone else who has liability for the debt. They will ask them for all of the debt. The council will not be able to recover the money if there is no-one else responsible. They will then have to make a decision to write off the debt.
Also, while your partner is not liable for any of your debts, the bailiff can still seize goods belonging to your partner. The onus will be on you to prove that the household items belong to your partner and not you. For more information, please read our article on belongings in bankruptcy.
Please take a look at this article on prenuptial agreements in bankruptcy for more information.
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Im Buying What Happens To My Mortgage And My House
The Insolvency Service page Bankrupts Home covers many of the questions you may have about this.
Your mortgage and any secured loans are included in your bankruptcy. If you have handed back the keys to the lender or you have been evicted by the lender any shortfall after the property is sold will be a debt that is wiped out by your bankruptcy. This applies even if you pay the mortgage for a while and then hand back the keys.
But if you carry on paying your mortgage and secured loans your lenders will not repossess the property, so it may feel as though bankruptcy hasnt affected your secured debts.
How much equity do you own?
If your house is worth more than the amount owed on any mortgage plus secured loan, then there is equity in the property and the OR will want to sell it.
When deciding how much equity you have, it can be reasonably argued to the OR that a lower value of the house should be agreed because of the need to sell the property relatively quickly and because lower sales costs are incurred . Think of all the problems with your property it needs a new roof, the boiler is 20 years old etc as these can all reduce the amount of money needed to purchase your equity.
Ways to avoid losing your house
The OR has three years to decide what to do with your property. If there is no equity at the end of this time, the house will usually be returned to you.
You can avoid losing your home if a relative or friend can buy your equity from the Official Receiver:
Who Is Bankruptcy Suitable For
If you have no real way of paying off your debts and few assets, then bankruptcy could be a suitable option.
If you are a homeowner its worth looking at other options because bankruptcy puts your home at risk of being sold if there is enough equity in it.
If youre a tenant, your landlord can apply to evict you legally if you have fallen into rent arrears.
Its important you dont make a decision to go bankrupt alone. Talk to a free debt adviser first.
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What Happens To Your Business
If youre self-employed, your business will be closed. Any business assets will be claimed by the trustee.
Your employees may make a claim for unpaid wages and holiday pay, payment in place of notice, and redundancy. Theyll make this claim to the National Insurance Fund, or the money may be claimed in the bankruptcy process.
You can start trading again, but youll have to follow certain rules.
How Does Bankruptcy Affect A Spouses Credit Rating
The bankruptcy of a spouse should not affect a non-bankrupt spouses credit rating. However, as the bankrupt spouse will be listed at their non-bankrupt spouses address, it often has an effect on both parties ability to gain credit.
If couples have joint assets I would always recommend taking some professional advice before agreeing to a final settlement with a Trustee in Bankruptcy. It is a complex area of the law and it is important to make sure the agreed settlement is fair to all parties.
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When Your Credit Card Debt Can Become A Sacking Offence
Some companies are requiring staff to sign employment contracts which mean they could be sacked if they fall into debt and have a County Court Judgment against them.
A CCJ, as its names suggests, is a repayment for a debt imposed by a county court judge. Any company or organisation owed money can apply for one, and for relatively small amounts, such as unpaid parking fines.
However, once the CCJ is paid off it can be wiped from a credit record during June and September 2011 an average 1,391 were issued every day and the average judgment was for £3,345 of debt.
For Anne it came as a shock to learn an unpaid credit card could lose her her job. Four years ago she had problems paying back her credit card after being made redundant. “I lost my job, my marriage broke up and I took my eye off the ball. As a result, I got behind with my credit card and didn’t make any payment for six months.”
Eventually, the credit card company took Anne to court, which, with interest, totalled just over £8,000.
“Thankfully, by that time, I was working again and in a position to pay the CCJ required I pay the bill back over two years. I set up a standing order and thought nothing of it.”
That was until Anne changed jobs several months later. “I was headhunted to work for another company. It was better pay and there were more staff benefits.”
Fraser Younson, an employment lawyer specialising in employment contracts, said Anne may have been justified in keeping her CCJ a secret.
