Tabula rasa. A blank slate. You are starting with a clean slate now that you have declared bankruptcy. Now that you have your head above water and are looking for new employment, you may wonder how that bankruptcy and a low credit score will impact your job search (or even your current job.) This is a common concern among the hundreds of thousands of people who file each year. Let’s look at some common concerns regarding employment and bankruptcy.
Can I lose my job due to bankruptcy?
No employer — government or private — may fire you because you filed for bankruptcy. Nor may an employer discriminate against you in other terms and conditions of employment — for example, by reducing your salary, demoting you, or taking away responsibilities — because of your bankruptcy. (Source NOLO Law for All.)
What will happen to my security clearance?
If your job requires a security clearance such as a military or government job, you may be concerned about the clearance. Filing for bankruptcy relief will not automatically prohibit you from obtaining a security clearance. In general, whether your bankruptcy will affect your security clearance depends on the circumstances that led you to file. If you experienced financial problems and had to file for bankruptcy because of an unexpected event (such as job loss, divorce, or a medical emergency), your bankruptcy will be viewed more favorably than if you had to file because of excessive spending or other financial irresponsibility. Having a large amount of debt could jeopardize your clearance (even without having filed for bankruptcy) so tending to the problem through a bankruptcy may show that you are dealing with the debt situation.
Can a bankruptcy hurt my employment chances?
While it is illegal for a federal, state, or local employers to not hire or to fire based solely on a bankruptcy filing, there are some steps you can take to help your case during a job interview. (The same rules do not apply when referring to private companies.) Most employers do a credit and background check for job applicants – especially so if the job involves finance, accounting or valuable merchandise. If your credit is poor or you’ve filed bankruptcy, be ready to provide interviewers with a short, contrite explanation and to redirect the conversation to one of your strengths as well as to a reference who can back up your story. Be sure to be honest and forthright in your interview because if not it may come back to haunt you later.