How Will Chapter 7 Affect My Employment
2 minute read â¢Upsolve is a nonprofit tool that helps you file bankruptcy for free.Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we’ll never ask you for a credit card.Explore our free tool
In a Nutshell
You cannot be fired simply because you filed for bankruptcy. In fact, employers usually donât learn about it and it is illegal for an employer to discriminate based on your past filing history.
Written byAttorney Jonathan Petts.
A common question we hear when people are considering filing for bankruptcy is âwill this have any effect on my job? Alternatively, if youâre looking for a job, will filing have any effect on your chances of landing one? This article will answer those questions for you.
Practical Considerations On Bankruptcy And Jobs
While this article places a spotlight on bankruptcy, as a practical matter, an employers hiring or firing decision will be based on numerous factors. Although employers may review a candidates or financial history during a screening process, it is important to remember that other factors such as experience, education and personal demeanor will also play a large part in getting a job.
Just because an employer has the right to deny you a job because of a bankruptcy does not mean that an employer will deny you a job because of bankruptcy. While the bankruptcy codes uniform prohibition on termination due to bankruptcy provides greater protection to those who are already employed, it can be difficult to prove that a firing was motivated by bankruptcy if there are other documented issues, such as a poor attendance record.
The bottom line is that the importance of bankruptcy to a potential employer will hinge on the type of job youre seeking as well as the substance of your resume. A bankruptcy may be more important to an employer who is hiring you in a fiduciary role than it is to someone who is hiring you into a retail or service industry position.
Before you seek to avoid bankruptcy for fear of the affect it may have on your career, it is probably good idea to meet with a local bankruptcy attorney and discuss your situation in greater detail.
You May Like: Can Restitution Be Included In Bankruptcy
Will I Lose My Job For Filing Bankruptcy
Under 11 U.S.C. 525, it is illegal for an employer to fire you because you filed for bankruptcy. Whether a government or private business, employers cannot fire an employee for filing bankruptcy. Employers also cannot discriminate against an employee for filing bankruptcy as well. This includes demoting, reducing salary, and/or eliminating responsibilities of an employee. Please keep in mind, however, the bankruptcy code will not protect you if there are valid reasons that warrant being fired or demoted. Some valid reasons include: tardiness, absence, dishonesty, stealing, incompetence, inappropriate behavior. Other reasons may apply depending upon the state the debtor lives in and what type of employment the debtor has.
Recommended Reading: How Many Bankruptcies Has Donald Trump Filed
Contact Oaktree Law For Bankruptcy Help
If you are drowning in debt, bankruptcy should not affect your employment. But it can help improve your financial situation and even discharge some of your debts. To reduce your risk and make filing for bankruptcy easier, contact our Los Angeles and Orange County bankruptcy attorney. At OakTree Law, well provide a free consultation to discuss your situation and options that can help you regain control of your financial future. Call us at or request a free evaluation today!
How Will Bankruptcy Affect Me When I Apply For A Job
Many people feel that bankruptcy will affect their prospects of obtaining a job in the future however this is not necessarily true. No federal, state or local government agency may take your bankruptcy into consideration when deciding to hire you. In contrast, private employers do not have rules against hiring someone who filed a bankruptcy. Employers that are financially focused firms may take money troubles into account since there is their area of expertise.
Private employers can conduct a credit check as a requirement for a job and find out about an applicant bankruptcy on their credit report. It is typically best to be honest and upfront about your situation. Showing that you were able to assess your financial situation and determine that filing for bankruptcy would allow you to start fresh may make you a better applicant in some circumstances.
How Can The Law Offices of David I. Pankin P.C. Help
To learn more about how to put your financial troubles behind you and get a fresh financial start, contact the Law Offices of David I. Pankin at 888-529-9600. David I. Pankin is a New York Bankruptcy attorney that has been helping consumers for over 20 years. We service the 5 boroughs, Long Island and Westchester with offices conveniently located in Brooklyn, Manhattan and Long Island. Call for you FREE consultation. We are looking forward to hearing from you!
David Pankin P.C.
Don’t Miss: Can You Get A Personal Loan After Bankruptcy
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.
Please Note That This Is Not An Exhaustive List And There May Be Other Roles That Could Be Affected
You may be able to work for a commercial bank, but this could depend on the bank you want to work for. Each bank will have their own policy, some roles will be regulated activity and cannot be undertaken by a person who is bankrupt. If you already work for a bank then you may need to check your terms of employment and speak to your banks confidential help line to see if your employment is at risk.
Some common examples of jobs not affected by bankruptcy include:
- Criminologist
- Bus Driver
- Black cab driver in London
You should also be aware that each individual employer sets the criteria for the position they are offering and has to comply with various pieces of legislation, as an example equal opportunities, when they advertise and employ someone. There will be many types of jobs advertised that are not available to someone who is bankrupt or has been discharged from bankruptcy, but there isnt a list of employers that you could refer to other than the details in the Insolvency Act.
Please note some professional bodies, such as chartered accountants or solicitors, may have rules prohibiting membership and you cannot enlist in the armed forces as an undischarged Bankrupt.
If youre worried about your finances and seeking an alternative to bankruptcy, government-approved debt help can allow you to write off unsecured debt and stop creditor pressure.
Read Also: Epiq Bankruptcy Solutions Llc Scam
If You Have A Security Clearance
Being financially irresponsible is what will most likely jeopardize your security clearance, not the actual bankruptcy. If your debt is due to medical bills or divorce, youre less likely to lose your security clearance than you would if its the result of something like gambling or addiction. Bankruptcy could even be seen as a positive because youre taking steps to manage your debt.
However, if you lose your security clearance, you could be fired or demoted if you can no longer be trusted to handle sensitive information.
What Happens If I Work Abroad
If you work overseas, bankruptcy has no bearing at all because it only applies to your finances in the UK. Under British law, you do not need to disclose bankruptcy to foreign employers. However, there may be legislation abroad, where you must disclose your bankruptcy. For more information, please read our article on .
You May Like: Renting Apartment After Bankruptcy
Do You Have To Tell Your Employer About Your Bankruptcy
Generally, you don’t have to tell your employer if you go bankrupt. However, you should check the terms of your contract of employment carefully to see if it says anything about you having to tell your employer if you go bankrupt. This is particularly likely to apply to you if you work in a financial organisation or role.
Will Bankruptcy Affect My Future Employment
When it comes to applying for jobs and potential employment, no federal, state, or local government agency can consider your bankruptcy when deciding to hire you. Only private employers retain the power to do so.
Jobs that require you to deal with money tend to be warier about hiring those who have filed for bankruptcy. Its also important to note that those private employers tend to do credit checks on job applicants and filing for bankruptcy would appear on your .
You May Like: How To File For Bankruptcy In Massachusetts
What If Ive Been Bankrupt In The Past
In some instances, being declared bankrupt in the past may affect an employment opportunity if youre applying for a new role. This is because some employers may perform a credit check on potential new employees to ensure theyre financially responsible . For most jobs, however, being bankrupt in the past shouldnt affect your employment prospects.
Can I Still Be Bonded If I Declare Bankruptcy
If you are an undischarged bankrupt, it might also be hard for you to get bonded. If you handle money for clients as a part of your employment, your job might require what is known as a fidelity bond. Fidelity bonds protect your employer from a loss for their clients as a result of an employees behaviour. Being an undischarged bankrupt can make it difficult to be bonded if this is a job requirement. If you are unable to be bonded, an employer may choose not to hire you for these types of positions.
As an undischarged bankrupt, you can also be prevented from holding certain roles such as a director of an incorporated company, a credit union, a co-operative, or a condo corporation.
Also Check: How Many Bankruptcies Has Donald Trump Filed
Benefits Of A Consumer Proposal
Less Effect on Your Career
Consumer Proposals are less invasive than bankruptcies and typically do not impact your career. A Consumer Proposal shows that you are managing your situation by paying off your debt in affordable monthly installments.
Unless your employer is one of your creditors, your wages are being garnished, or your employment requires security clearance, it is unlikely for them to find out you have entered into a Consumer Proposal. If you have a professional designation or license, similar to bankruptcy, you may be required to notify your professional association.
Typically, Assets are Retained
Unlike bankruptcy, the debtors assets do not vest with the LIT. In most cases, Consumer Proposal terms are made up of monthly payments over a number of years and the debtor is permitted to retain all or most of their assets.
Less Impact on Your Credit
In Ontario, upon filing a Consumer Proposal, your credit rating will be affected. The filing of a Consumer Proposal will remain on your record for three years from the date of completion of the Consumer Proposal. In many cases, this notation on your credit report will be for less amount of time, compared to a bankruptcy.
Whether youre choosing to proceed with bankruptcy or you are leaning towards a Consumer Proposal, you will be required to work with an LIT who can advise you accordingly.
Date:
How Will Bankruptcy Affect My Job
Filing for bankruptcy raises many considerations. One of the most important is whether or not bankruptcy affects your job. Many people delay filing for bankruptcy due to their concerns about losing their job or being judged in the workplace for their financial difficulties.
Although understandable, these concerns arent necessary.
Filing for bankruptcy is unlikely to affect your career.
For many, relieving the stress of financial challenges allows them to flourish in other areas of their lives, including their work.
Keep in mind, potential employers can consider your financial situation when determining whether or not to extend to you a job offer. This is particularly true when you work in a position in which you are responsible for handling money. But in many cases, employers view bankruptcy as a positive step toward repairing a challenging financial situation. Filing means you have taken action to fix your problems and that youve removed any temptation someone might experience when dealing with a financial crisis.
This isnt to say that nobody will judge you for filing for bankruptcy. It might happen.
But will bankruptcy affect your job?
It all depends on your circumstances and with whom you share your decision to file. But its important to know the law protects you.
You can read more about the US Bankruptcy Code here.
You May Like: How Many Bankruptcies Has Donald Trump Filed
Can Bankruptcy Affect My Job
The Truth About Bankruptcy and Your Career Filing for bankruptcy brings along many concerns, one common concern being the impact it may have on your career. This article will explain the main downsides of filing an assignment in bankruptcy, whether or not it can affect your employment, and what may be a better and safer
Security Clearances Bankruptcy And Employment
Many jobs require a security clearance. If you’re a member of the armed forces or an employee of the CIA, FBI, another government agency, or a private company that contracts with the government, you might have a security clearance.
Do you risk losing your security clearance if you file for bankruptcy?
Probably notand the opposite might be true. According to credit counselors for the military and the CIA, a person with financial problemsparticularly someone with a lot of debtis at high risk of being blackmailed. By filing for bankruptcy and getting rid of the debts, you substantially lower that risk. Bankruptcy usually works more in your favor than to your detriment.
Read Also: Will Filing Bankruptcy Clear A Judgement
How Employers Find Out About Bankruptcy Filings
In practice, employers rarely find out about a Chapter 7 bankruptcy filing. However, if a creditor has sued you, obtained a judgment, and started garnishing your wages, your employer will get the news. The bankruptcy will stop the wage garnishment, and your employer will be notified about it. In such a situation, your employer already knew you were having financial problems and will probably welcome the bankruptcy as a way for you to take affirmative steps to put your problems behind you.
If you file for Chapter 13 bankruptcy, your employer is likely to learn of your bankruptcy case. If you have a regular job with regular income, the bankruptcy judge may order your Chapter 13 payments to be automatically deducted from your wages and sent to the bankruptcy court. In effect, your employer will be pressed into service as a sort of collection agency, to make sure you honor your Chapter 13 plan.
Will Filing For Bankruptcy Affect My Job
Federal law prohibits any employer from firing someone because they filed for bankruptcy. Under Section 525 of the bankruptcy code, termination, discrimination, or denial of employment due to bankruptcy is forbidden. This includes both government and private employers.
However, as any Los Angeles bankruptcy attorney knows, an employer can fire you for lying, breaking workplace rules, being incompetent, or persistent tardiness. Bankruptcy wont protect you in these instances. But the terms of your employment wont change as a result of a bankruptcy filing, meaning your employer cant reduce your salary, demote you, or take away job responsibilities due to your filing.
You May Like: Is An Sba Loan Dischargeable
What You Can Do
Most employers won’t find out about a bankruptcy if you’re already employed with them unless they run a credit check after you apply for a promotion. To do this, they need your signed approval. If you’re asked to sign a release either during a job interview or when seeking a promotion that’s the time to be honest about your financial history. Briefly explain the reasons behind the bankruptcy, such as divorce or a spouse’s job loss, then explain how the bankruptcy has allowed you to get your finances under control and in order. Don’t dwell on the issue. Instead, turn the conversation around to your strengths. Tell the interviewer what previous employers would say about your job performance, or present copies of recent positive performance reviews to prove your worth for the new position.
References
What Happens To My Credit If I Declare Bankruptcy
When you declare bankruptcy, it’s a sign that you are no longer paying your debts as originally agreed, and it can seriously damage your credit history. That said, the two types of bankruptcy aren’t treated the same way. Because chapter 7 bankruptcy completely eliminates the debts you include when you file, it can stay on your credit report for up to 10 years.
While chapter 13 bankruptcy is also not ideal from a credit standpoint, its setup is viewed more favorably because you are still paying off at least some of your debt, and it will remain on your credit report for up to seven years.
Shortly after your bankruptcy is discharged by the courtmeaning you no longer owe the debts you’ve included in your filingit may be difficult to get approved for credit, especially with favorable terms. There are some lenders, however, who specifically work with people who have gone through bankruptcy or other difficult credit events, so your options aren’t completely gone.
Also, the credit scoring models favor new information over old information. So with positive credit habits post-bankruptcy, your credit score can recover over time, even while the bankruptcy is still on your credit report.
You May Like: Has Trump Filed Bankruptcy
