Life is tough at times. In the United States, most people equate “hard times” to financial struggles, and this is true for many people. Money stress is one of the worst stressors that an adult can face, especially if you’re the sole provider of your family.
While life ebbs and flows, money comes and goes. It’s one of the facts of life that many were never taught growing up or while in grade school. This is just one of those things you eventually figure out as you get older. But, thankfully there are many measures you can take to become financially healthy, no matter what pitfalls you may have stumbled into.
For those who’ve found themselves in dire financial straits, you might be considering filing for bankruptcy. If so, there are several things you should know before you head down this road.
Here, we’ll focus on how bankruptcy can impact your employment opportunities.
What Exactly Happens When You File Bankruptcy?
Picture this scenario:
You walk into the courthouse with your lawyer and all of your paperwork and your intentions are to absolve all of your debt. Well, then you’re informed that you’ll still be responsible for some of your debts. In addition to this, your bankruptcy filing will then become part of public record.
So, what happens then?
This means that anyone can access your bankruptcy records, even a prospective employer.
While most of your debts will be discharged through a Chapter 7 bankruptcy filing which you won’t have to pay, other debts like IRS, child support, and governmental loans you’ll still be responsible for. And these are all going to be listed on your credit report, along with the bankruptcy filing.
The bottom line is, know that your bankruptcy and debt will both be accessible by current and future employers, and anyone else who wants to be nosey.
How Can Bankruptcy Affect My Employment?
Thankfully, the current bankruptcy code in the United States has several safeguards in place to protect employees and job applicants who file bankruptcy from discrimination.
In addition to the bankruptcy code, the Fair Credit Reporting Act (FCRA) helps to mitigate the ways in which employers can conduct and use credit checks, and has clauses in place that deter employers from sharing information or discrimination.
However, even with all of these fancy safeguards that look great on paper, let’s face it, you live in the real world.
Discrimination is hard to prove in most (if not all) situations. Consider this: An employer might not hire you based on your gender alone, and there’s really no way to prove this at all unless you have a video or voice recording of the employer blatantly stating the discriminatory reasons.
No matter the case, if you suspect that you’re being discriminated against based on a bankruptcy filing, you should report the employer immediately or file a discrimination claim in your state.
Why Does Bankruptcy Deter Employers from Hiring?
The main reason why an employer might not hire you based on a bankruptcy filing is that it might convey to them that you’re irresponsible.
In addition, if the position that you’re applying for requires you to handle money in some form, an employer might tend to think that you’re not the right person for the job, being that you’ve possibly mismanaged your own finances in the past.
Again, if you’re being passed over for a job based on a bankruptcy filing, a discrimination case of this sort is extremely difficult to prove. But, unfortunately, it is part of the real world that we live in today.
Studies show that around 25 percent of employers conduct credit inquiries on prospective job candidates, and only around 6 percent of all employers conduct credit checks as a standard hiring protocol.
This is a relatively low number, but in the event that you file bankruptcy and are worried about it affecting your job search, perhaps staying away from high profile jobs where you have to handle sensitive information or large sums of money would be the best route to take.
In the meantime, work on building your credit and reestablishing yourself financially.