How Will my Employer React to my Decision to File for Bankruptcy?


While it is difficult to say whether or not an employer, current or future, will react poorly to your bankruptcy, a few things are certain: You will not be fired. You will not be demoted. You will not be punished…at least you shouldn’t be.

The United States Bankruptcy Code forbids both public and private employers from discriminating and terminating employment based solely on the fact that you filed for bankruptcy. Note however, that if you have given your employer other reasons to dismiss you, such as excessive absences or poor performance, your bankruptcy will not protect you from getting the axe.

Further, if you are searching for a new job, do not be discouraged that a bankruptcy on your record will blow your chances at getting the position you want. Not only does the Bankruptcy Code shield you from termination and discrimination in an existing job, it may protect you when seeking out future employment.

If the position you are hoping to land is with a federal, state or local government agency the law states that the employer cannot turn you away just because of your history of bankruptcy. While private employers may refuse to hire you under such circumstances, do not despair. Depending on the responsibilities of the position for which you are applying, an employer may look favorably on your decision to file.

It is true that an employer managing a position in finance, accounting or the handling of cash will take a bankruptcy seriously. Nonetheless, a bankruptcy discharge may help with positions of high security clearances or those involving valuable merchandise. Employers may be concerned with the possibility of their employees accepting bribes or stealing company goods or stealing secrets to pay off the employee’s own personal debts. That being said, a decision to file bankruptcy is often seen as a responsible and proactive decision to solve a potentially damaging situation.

All things considered, it is possible that your bankruptcy goes unnoticed by your current employer. Generally, employers only learn of an employee’s bankruptcy if his wages are being garnished, if the employer is listed as a creditor or if the employee has a Chapter 13 plan deducting payments directly from his or her paystubs.

Before coming to the conclusion that filing bankruptcy will greatly damage your career, meet with one of our attorneys to discuss why bankruptcy could potentially help your career. In fact, here are individuals whose careers were not ruined by bankruptcy:

  1. Walt Disney
  2. Burt Reynolds
  3. Abraham Lincoln
  4. Michael Vick
  5. Larry King

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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