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How Does Bankruptcy Affect Your Job and Future Credit? 

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How Does Bankruptcy Affect Your Job and Future Credit? 

The stress leading up to a declaration of bankruptcy can be intense. You worry about creditors and wonder if you will be able to stay in your home and keep your car. You may also worry that your bankruptcy will become public knowledge and affect other aspects of your life. Will your boss and co-workers find out? Will it affect your current job? Will it prevent you from being hired for future jobs if it shows up on your credit report? The answers to these questions are more encouraging than you may realize.

Let’s begin by discussing the ramifications of bankruptcy on your current employment. Your co-workers have no reason to ever know that you have filed for bankruptcy unless you tell them. It’s not like that scene from The Office where Michael Scott shouts across the bullpen, “I…DECLARE…BANKRUPTCY!!!!” 

In some cases, your employer may not know about your bankruptcy proceedings, but in other cases, they will have to know.

  • For example, if you have been having your wages garnished to pay back a persistent creditor, your employer would be aware that this is no longer necessary since you are in the process of Chapter 7 or Chapter 13 bankruptcy. 
  • In rare cases, your repayment plan in Chapter 13 bankruptcy may require your wages to be garnished. 

However, rather than causing your employer to cast aspersions on you, bankruptcy may have the opposite effect. The fact that you have taken control of your debts and are making positive steps to either have them discharged or reorganize them is something that should garner your employer’s respect. Additionally, you may find yourself more focused on your job once an automatic stay has removed the prospect of constant harassing phone calls and letters from creditors.

If you are concerned that you will lose your job, don’t be. This is not allowed. You are legally protected from employment discrimination under the U.S. Bankruptcy Code.

If it is solely because of your bankruptcy, your employer is not allowed to:

  • Terminate you
  • Otherwise discriminate against you (such as by demotion)

Can I be denied employment because of bankruptcy?

  • Regarding bankruptcy and getting a job, If you are applying for government positions, the law is clear: you cannot be denied employment solely because of your bankruptcy. 
  • This isn’t necessarily the case with private companies. It will certainly be difficult to obtain employment where budgeting, accounting, or payroll is a major part of the job description, but if you are qualified for your position and acceptable in every other way, your bankruptcy shouldn’t be a disqualifier for most situations. 
  • We recommend you mention your bankruptcy yourself, rather than waiting until you are asked about it after a credit check. This way, you can control the narrative. Student loans, crushing medical debts, credit card debts – none of these lessen your worth as an individual or as an employee.

Will my bankruptcy show up on a pre-employment check?

Yes, if the company runs a credit report. Chapter 7 bankruptcies remain on your credit report for 10 years and Chapter 13 bankruptcies remain for 7 years. You can read about this in detail in our article, How Long Does a Bankruptcy Stay on Your Credit Report? Generally, companies don’t take the time and trouble to do a pre employment check for bankruptcy unless it is the final step in hiring you. This is good news; it means that they already consider you to be a strong candidate.

Your bankruptcy will not show up on a criminal background check because you are not a criminal. Bankruptcy is not against the law. 

As we mentioned above, government agencies (federal, state, or local) cannot deny you employment simply because your bankruptcy appears on your credit report. 

As bankruptcy attorneys, we work with you through the entire bankruptcy process, including after your debts are discharged in Chapter 7 bankruptcy, or after your Chapter 13 bankruptcy period. We will check to make sure that your credit report is correct and that no creditors are continuing to report negatively or show a debt as not being discharged. 

Sawin & Shea Is Here to Help

No bankruptcy situation is completely straightforward, so don’t try to maneuver the intricacies of Indiana’s bankruptcy codes on your own. At Sawin & Shea, LLC, we understand that hiring an attorney to help you file bankruptcy is scary. We are committed to providing compassionate and non-judgmental representation to all of our clients. Our attorneys have helped thousands of people just like you get the fresh start they deserve. We are here to help understand how does bankruptcy affect your job and future credit.  

Speak to an attorney today at (317) 759-1483. Or contact us online

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Indianapolis, IN 46205
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$0 Down Attorney Fees

No upfront attorney fees in qualifying cases. Pay only court filing fee, credit reporting fee, and pre-bankruptcy credit counseling session fee to get a case on file to stop garnishments, repossessions, and certain court actions. Restrictions may apply. Please call to discuss your situation and learn how we can help.