Bankruptcy can impact your current and future employment in a variety of ways. Most importantly, you cannot legally lose your current job or be demoted or have your wages reduced due to a bankruptcy filing.
A current employer may already know of your difficult financial situation if a creditor has filed against you and your wages are being garnished. Bankruptcy, however, will stop the deductions from your wages. This change will be noticed by your employer. Additionally, if the bankruptcy ruling requires new deductions from your wages, the employer will become aware of your bankruptcy.
If you are seeking a government job, no agency – be that federal, state or local – can take into consideration your bankruptcy when deciding if they will hire you. Jobs with private companies, however, can take your bankruptcy into consideration when deciding whether or not to hire you.
When applying for a new job, the impact of your bankruptcy will differ based on the type of job you are seeking. If the job handles cash or manages money, employers likely will be more concerned about your personal financial background. Bad credit and bankruptcy discovered through credit reports run by potential employers are red flags about potential employees.
You can be upfront if discussions with a potential employer lead to credit checks. State clearly and concisely the reason for your bankruptcy. Honesty goes a long way in building confidence between potential employers and employees. You should be sure to have excellent references to shore up your work ethic and knowledge of the subject matter you would be working with to ease any anxiety or hesitancy that a potential employer may have.
Your bankruptcy will show up on your credit report for about 10 years. It is important to build good employer/employee relationships and good credit immediately after your filing. These will show solid footing for the fresh financial start granted you through bankruptcy.