If you’re considering bankruptcy and also looking for a job (or believe you may have to be job hunting in the near future), you may be concerned that prospective employers can use your bankruptcy as a reason not to hire you. Even if you have a secure job, you may fear that if you’re being considered for a promotion, your employer will check out your credit report and see your bankruptcy.
Your credit score probably isn’t very good if you’re considering bankruptcy. Therefore, having a bankruptcy on your credit report (typically for seven years for Chapter 13 and 10 years for Chapter 7) may not be considered any worse. If you’re prepared to address it with a current or prospective employer, a bankruptcy filing can be better than just a bad credit score. You can explain that you went through a difficult period (medical bills, job loss or whatever the situation was) and have taken steps to get back on track.
Bankruptcy – or poor credit in general – can be a factor in some professions
First, it’s important to know the law. The Equal Employment Opportunity Commission (EEOC) prohibits employers to make hiring, firing or promotion decisions based on a person’s history of bankruptcy. They are not, however, prohibited from making these decisions based on poor credit. They do have to get your permission, however, to check your credit.
A person’s credit is more relevant in some lines of work than others. For example, anyone whose work gives them access to large amounts of money or valuable assets (including law enforcement officers) as well as many people who work in any capacity for a financial institution typically must consent to a credit check. The same is true for anyone whose job (even as a contractor) requires a security clearance.
Generally, as you can see, a bankruptcy typically isn’t going to harm your chances of getting a job or being promoted any more than a poor credit report filled with overwhelming debt – and maybe less. If you’re dealing with debt you can’t manage, it may be wise to consider bankruptcy as an option.