If you plan to file for bankruptcy, you might be worried about the effect it could have on your employment. For instance, many people wonder:
Although your employer might learn about your bankruptcy case, rest assured that your bankruptcy won't affect your current employment in most situations. However, it might prevent you from getting a job in private industry later.
No employer can fire you solely because you filed for bankruptcy. And an employer can't use a bankruptcy filing as a reason to change other terms or conditions of your employment.
Specifically, your employer can't do the following:
If your employer fires you soon after learning of your bankruptcy and no other justifications exist, you might have a case against the employer for illegal discrimination. But bankruptcy won't shield you from other employment misconduct, so if you've been tardy, dishonest, or incompetent at your job, the fact that you filed for bankruptcy won't affect your termination.
Yes, all bankruptcy filings are public records, except for sensitive information, such as account numbers, Social Security numbers, and minor children's full names and birthdates.
But looking up a bankruptcy case on the court's Pacer system isn't a simple process. Unless your boss knows you filed, it's unlikely your employer would check your bankruptcy filing status.
No, bankruptcy trustees don't routinely talk with a filer's employer, and the court doesn't send a notice of the bankruptcy case out to employers. But employers can find out about a bankruptcy filing in other ways. Keep reading to learn how.
Again, employers rarely find out about a bankruptcy filing. But it can happen, and here's how.
Many jobs require a security clearance. Suppose 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. In that case, you might have a security clearance.
Do you risk losing your security clearance if you file for bankruptcy?
Probably not, and your bankruptcy might prove beneficial. According to credit counselors for the military and the CIA, people with a lot of debt can be targets of blackmail. You substantially lower that risk by filing for bankruptcy, so filing usually works more in your favor than detriment.
No federal, state, or local government agency can consider your bankruptcy when deciding whether to hire you. Private employers, however, aren't constrained by a similar rule, and some people find that having a bankruptcy in their past haunts them.
A bankruptcy filing causes problems mainly for those applying for jobs dealing with money, such as bookkeeping, accounting, and payroll. So how does an employer find out you filed? Many private employers conduct credit checks on job applicants, so employers learn about bankruptcies from credit reports.
While an employer needs your permission to run a credit check, employers can refuse to hire you if you don't consent. If your employer asks for this authorization, consider speaking candidly about what the employer will find. Being honest and upfront might outweigh any adverse discoveries.
Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You
More Like This
Consider Before Filing Bankruptcy
Helpful Bankruptcy Sites
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.