Does Bankruptcy Prevent People from Getting Jobs?

It is commonly feared that bankruptcy prevents people from getting jobs. However, an employer cannot by any means refuse to hire your or decide to fire you on the basis of you having a bankruptcy on your credit report.  Under the Bankruptcy Code, there are certain protections afforded to debtors prohibiting discriminatory actions by employers due to a bankruptcy.  As such, the immediate answer to whether bankruptcy will prevent you from getting a job is now. However, you may find that there are those employers who try to skirt around the law and rescind offers of employment, citing poor credit history as a reason for candidates being untrustworthy.

Bankruptcy Law and Employment

11 U.S.C. Section 525(b) of the Bankruptcy Code says specifically that no employer can hold a bankruptcy against an employee as grounds for termination or rescinding an offer of employment.  So, what happens if you have incurred a few debts here and there, and have been struggling to pay them on time or pay them off altogether?  In this situation, an employer may look at your credit history and feel that there may be a potential burden from debt collection companies.  This alone may actually be the underlying reason why an employer would rescind an offer of employment. Now, let’s say that you have recently filed for a bankruptcy. 

• If it was a chapter 7 bankruptcy then all of your debts will be wiped out, however if it was a chapter 13 bankruptcy, then chances are you will have to repay your debts using a strict repayment plan that is overseen by the courts.  In the event that you miss a payment or two, then there is the potential that the creditors who you made the agreement with will end up calling your job to track you and their money down.  If this is the case and a potential employer sees this then they may not hire you.  The reason will not necessarily be the bankruptcy- instead it will be the poor payment history that you bring to the table.

Before filing bankruptcy, you should consider negotiating your debt down and getting on a payment plan. That way, the creditors can report that you are in good standing with your payments.  Additionally, you will want to assess your credit report once every few months so that you can get a better idea of what employers are seeing about you.

Getting Help

Because it is illegal for an employer (current or potential) to refuse to hire you, or decide to fire you because of a bankruptcy on your credit report, you should strongly consider speaking with an attorney if you feel you may have been fired because of your bankruptcy.