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What a bankruptcy can mean for your employment prospects

On Behalf of | Jan 5, 2017 | Chapter 7

People who file for bankruptcy in Tennessee are most likely aware of how that can affect things like their credit score and their ability to qualify for certain types of loans. However, they might be surprised to learn that a bankruptcy can also affect a person’s ability to find employment in some situations.

According to the Huffington Post, it is becoming increasingly common for employers to run credit checks for job applicants, particularly for positions in the financial sector or that involve access to cash. Ostensibly, employers are looking for people who could potentially steal from the company or commit fraudulent acts and in that respect, having a bankruptcy on one’s record may count negatively against him or her.

While employers are explicitly barred from denying employment for discriminatory purposes such as a person’s gender or race, the legality is less clear when it comes to a person’s financial history. Indeed, courts across the country have come to differing conclusions on this issue. While the Bankruptcy Code states that employment by the federal government cannot be denied based on a past bankruptcy, there is no such distinction for private employers. The Code does, however, state that private employers cannot fire someone because of a bankruptcy. Some courts have chosen to interpret that the statute is intended to apply both parts to both federal and private employers, while others have disagreed.

Should someone who has declared bankruptcy find themselves facing a credit check with their job application, Business Insider has a few recommendations. First, having strong personal recommendations from people who can attest as to the applicant’s strong moral character can help assure the employer that any past credit problems were not due to criminal activity. Second, honesty may be the best policy. If a credit check is taking place, the applicant may be better off being up front with the employer about their history and providing an explanation of why their credit history is poor.


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