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Can Bankruptcy Affect Your Current Job Or Chances Of Getting A Job?


Filing for bankruptcy offers you the chance to start over financially. However, as much as every year bankruptcy offers thousands of debtors a chance to start over financially, this opportunity comes with some consequences. If you are considering either a Chapter 7 or Chapter 13 bankruptcy, you might be worried about how your decision will affect your current employment or your chances of getting a job. For example, most individuals wonder:

  • Will my boss find out I filed for bankruptcy?
  • Can my employer fire me after I file for bankruptcy?
  • Can a potential employer refuse to hire me due to a bankruptcy filing?

Generally, even though your employer might learn that you filed for bankruptcy, your bankruptcy will most likely not affect your current employment. On the other hand, a bankruptcy case might affect your chances of finding employment in the private sector. Read on to learn more.

Will Your Boss Know About Your Bankruptcy Filing?

The law doesn’t require you to inform your employer about your bankruptcy filing. In fact, in most situations, employers don’t find out such information. But, it can happen. For example, your employer can find out you filed for bankruptcy if you have a wage garnishment. When your employer is notified to stop the wage garnishment, they will find out about your bankruptcy.

Secondly, your employer might find out about your bankruptcy if the court orders your Chapter 13 payments to be deducted straight from your wages. Finally, if your employer is among the creditors you listed when you filed for bankruptcy, they will know you filed for bankruptcy when they receive a notice of your bankruptcy case.

Can Your Current Boss Fire You for Filing for Bankruptcy?

Generally, your boss can’t fire you from your job just because you filed for bankruptcy. Additionally, an employer is not allowed to change the terms or conditions of your employment solely because you filed for bankruptcy. Federal law protects debtors from employment discrimination. Section 525(a) of the bankruptcy code prevents government agencies from refusing to hire, firing, or discriminating against individuals who have been debtors solely because of filing bankruptcy. On the other hand, section 525(b) prevents private employers from terminating a person’s employment or discriminating with respect to employment of a person solely because of filing for bankruptcy.

Can a Potential Employer Deny You a Job Due to a Bankruptcy Filing?

Under the current law, no state, federal or local government agency can consider your bankruptcy when determining whether to employ you. However, some private employers do not follow this rule, and, unfortunately, some filers find that their bankruptcy cases affect their chances of finding employment in the private sector. Fortunately, most employers do not base their hiring decisions on a person’s credit alone unless the work an individual is going to be doing is directly related to their credit. Often, a person’s credit is considered alongside other factors like skills and work history.

It is crucial to note that employers can refuse to hire individuals who refuse to consent to credit checks. When asked to give such authorization, consider being open with the employer.

Contact a Southeast Iowa Bankruptcy Attorney Today

If you are struggling financially because of overwhelming debt and considering filing for bankruptcy, contact a skilled Southeast Iowa bankruptcy attorney at the Noyes Law Office today for legal guidance.



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