The Effects of Bankruptcy on Your Job

If you have recently filed or are considering filing bankruptcy, you may be wondering about the effects it could have on your job as well as future employment prospects. Let’s look at what you can expect after filing bankruptcy.

Your Current Job is Safe

Let’s get the anxiety out of the way first. You cannot legally be fired solely for filing for bankruptcy. Not only can your employer not fire you, they can not change anything about the terms of your employment based on your bankruptcy alone. You can’t be demoted or suffer a reduction in salary or responsibilities. This goes for government and private jobs.

This is one of the more important safeguards to protect you if bankruptcy is your only option, as your finances will be completely upside down, and getting fired would certainly put you in an even more desperate situation.

But keep in mind that even though it may not be the stated reason, your employer can fire you at-will and can state any reason they wish doing so. You could be hard-pressed to prove that it was solely for the fact of your filing bankruptcy.

What About the Future?

Unfortunately, these protections do not extend to future employment with private companies. These days more employers than ever in the private sector are running credit checks on their employees as a part of the application process. Not only can this be problematic if you are applying for any sort of job that deals with money, they can deny employment altogether if you refuse consent to the credit check.

It will be important that you be upfront about what they are going to find. In some cases, the employer will view the situation favorably, considering that you have taken steps to file bankruptcy and are trying to climb out of debt. This certainly looks better than continuing to drown in debts that aren’t getting paid.

What Other Ways Can Employers Find Out?

There are a few ways for your employer to find out about your bankruptcy even if they never run a credit check.

If you have a wage garnishment. If the garnishment falls under the bankruptcy your employer will receive a notice informing them to stop the garnishment.

If you are required to make payments against your bankruptcy (Chapter 13). It is likely the judge presiding over your case will order these payments to be deducted from your wages and sent to the court. This is their way of ensuring you comply with your bankruptcy plan.

If you are already in debt to your employer. Part of your bankruptcy paperwork will include listing all your debts, and if your employer is on that list, they will receive notice of your bankruptcy filing.

Consider Credit Counseling Before Filing Bankruptcy

As a non=profit debt consolidation service, our main goal here at CreditGUARD is to help you get out of debt and educate you on how to stay that way. If you have been considering bankruptcy as your only option, give us a call right away and let’s see if our programs could be right for you. While bankruptcy is sometimes the only way, often with a little debt management and hard work, you can avoid such drastic measures. Call today to discuss your situation with one of our credit counselors.