If you’re saddled with overwhelming debt, you may not have considered the option of filing for bankruptcy simply based on things you’ve heard about it over the years. Many of them likely aren’t accurate. It’s important to get accurate information about both types of personal bankruptcy (Chapter 7 and Chapter 13) to determine whether it’s your best opportunity to get your financial situation back on track.
One common misconception is that having a bankruptcy on your record can prevent you from getting a job or even cost you the one you have. In most cases, neither of these things is true.
Occupations where an employee’s personal finances are considered relevant
There are some occupations where a person’s credit record is a relevant factor. These include law enforcement jobs and any other occupation where a person has access to cash and/or other valuable assets.
Any job where a security clearance is required (for example, some positions in the government) often requires a good credit record. This is in part to minimize opportunities for blackmail. Of course, it’s important to note that if you’re in serious debt, your credit record would likely keep you out of jobs like these anyway, whether you filed for bankruptcy or not. In fact, bankruptcy may ease concerns about you, since it shows that you are forthright about dealing with the issue.
Can other employers find out about a bankruptcy?
If you’re not looking for or in a job like those described above, an employer likely won’t find out about your bankruptcy. Even if they do, most private employers are prohibited from making promotion and firing decisions based on a person’s bankruptcy under bankruptcy law. That protection doesn’t extend to hiring decisions.
Many employers run background checks that include credit reports on applicants and sometimes before promoting an employee. Whether they see a bankruptcy may depend on what type of check they run. As noted, an employer may perceive a bad credit record just as negatively – if not more so – than a bankruptcy, which shows that you did something to improve your situation.
Your best bet is to be prepared to talk about your bankruptcy if a potential or current employer has uncovered it. You don’t have to go into detail about what led to it. Focus on the fact that you’ve taken steps to address your debt and learn how to remain on solid financial ground going forward.
Seeking experienced legal guidance can help you decide whether bankruptcy is the right step for you. If it is, this guidance can also help you go through the process as smoothly as possible.