Choosing to declare bankruptcy is a difficult decision to make. Anyone who has watched their financial situation deteriorate can relate to the feeling of desperation that fuels many bankruptcy filings. Filing for chapter 7 bankruptcy opens up a new world of possibilities and provides the fresh start so many need. While many filers understand how a filing can affect their credit score and report, bankruptcy might also affect your job. Read on to find out about what employers can do to bankruptcy filers.
Keep It To Yourself
Some people need the support of co-workers and feel better when they talk about their bankruptcy filing. You might find out that you are far from alone with your financial troubles and that others have taken the same actions as you. Unfortunately, many employers find out about the bankruptcy that way. Otherwise, it might be difficult for an employer to learn of your filing.
One other common way employers finds out about the filing is when wage garnishments come to a sudden end. Employers must cooperate with court-ordered wage garnishment and may ascertain that you filed bankruptcy when an order comes to cease the deductions.
Can You Lose Your Job If You File Bankruptcy?
Of the 50 states, eight of them have what is known as "at will" statutes. That means the employer can fire you without having to give a specific reason. While no employer is likely to fire someone on the basis of a bankruptcy filing alone, some employers might begin taking a closer look at the employee and their work.
Do You Have a Security Clearance?
Several levels exist when it comes to security clearances. At some levels, your bankruptcy might or might not affect your ability to get and keep a security clearance. The financial status of an employee is important to national security. The theory is that if you are in an extreme amount of debt, you could be more likely to take money in exchange for secure information. That being said, an applicant that has already declared bankruptcy has no such debt and is not a risk.
Working in the Financial Sector
One problematic situation could occur for those working in the financial industry. If you work at a bank, an investment firm, or are involved in any type of consumer credit work, the bankruptcy might cause you problems. Many of these jobs require background checks that will turn up the federal filing notation on your credit report. Many financial sector employers have provisions that could prohibit employing those with a bankruptcy. If you know the background check will reveal your bankruptcy, be upfront about it from the beginning. Not all financial jobs are affected by the filing.
For more information about chapter 7 bankruptcy law, speak to a bankruptcy lawyer about your situation.