Can Bankruptcy Affect Your Job or Employment Opportunities?

Federal law gives all individuals and some other entities the right to file for bankruptcy protection. You have the right to file for bankruptcy regardless of your age, marital status, and whether or not you have ever filed for bankruptcy in the past. Likewise, you can file for bankruptcy whether or not you are currently employed. Many bankruptcy filings involve applicants who have had to leave the workforce permanently because of age or illness or people who are hoping to reenter the workforce but have been out of a job long enough that they can no longer pay their debts. Meanwhile, it is obvious to everyone who is employed that the simple fact of having a job does not automatically mean that all your debts disappear or even that it is easy to keep up with payments on them. You can file for chapter 7 or chapter 13 bankruptcy if you have a job, and your employer cannot stop you; for that matter, neither can your spouse, creditors, or anyone else. To find out more about filing for bankruptcy while you are employed or looking for a job, contact a Monmouth County bankruptcy lawyer.

Filing for Bankruptcy is a Legally Protected Activity

Filing for bankruptcy is a legally protected activity; in the context of employment law, this means more than simply that you have the right to do it. In employment law, a legally protected activity is something that your employer cannot punish you for doing. The following are examples of other protected activities:

• Requesting a leave of absence from work for medical or family caregiving reasons
• Filing a workers’ compensation claim
• Requesting accommodations for a disability
• Reporting misconduct or illegal activity in the workplace to regulators or law enforcement
• Filing a discrimination complaint
• Participating in an investigation into alleged misconduct or crimes at your place of employment

If you file for bankruptcy, your employer cannot fire you, reduce your pay, change your work schedule without your consent, or take any other adverse action against you because of it. To do so is employment discrimination or, in the case of employers firing employees, wrongful termination of employment.

How Much Can Your Current Employer Find Out About Your Bankruptcy Case?

The odds are in your favor that your employer will not find out about your bankruptcy filing until years after the fact, if at all. The obvious place for someone to see that someone else has filed for bankruptcy is on the filer’s credit report, and employers usually do not check the credit reports of employees who are currently working for them. (You might think that your employer micromanages you by counting your keystrokes and the like, but checking to see whether employees are splurging on buy now pay later and whether they are keeping up with the payments would be a whole new level of micromanagement.)

If your paychecks are being garnished, your bankruptcy filing may stop the garnishment. If that happens, the court will order your employer to stop sending a portion of your pay to the creditor who originally requested the garnishment. This court order will state that the reason to stop the garnishment is that you have filed for bankruptcy protection. Meanwhile, records of bankruptcy cases are available to the public in heavily redacted form, so if your employer wanted to find out about your recent bankruptcy filing, they could, but it would probably never occur to them to ask.

Can Prospective Employers See Your Bankruptcy Filing on Your Credit Report?

Employers can check your credit report during a pre-employment background check. However, public sector employers including federal, state, and local governments, are not allowed to reject applicants based on prior bankruptcy filings or other negative marks on their credit reports. The protections are not as strong regarding private sector jobs; private sector employers may use an applicant’s credit history as a factor in hiring decisions. The Fair Credit Reporting Act outlines the disclosures that prospective employers must make before accessing a job applicant’s credit report or making negative judgments based on the information contained in it. It also provides procedures for job applicants to dispute unfair decisions by employers based on their credit reports.

Contact an Experienced New Jersey Bankruptcy Lawyer

Jonathan Goldsmith Cohen has helped thousands of clients successfully file for bankruptcy, after which they continued at their jobs or got new jobs. Don’t let fear or public stigma prevent you from making the best choice for yourself and family. Contact us today to discuss your situation.