Will my employer know if I file bankruptcy?
Although there is less of a social stigma for filing bankruptcy than in the past, nobody wants their friends, co-workers, or neighbors knowing their financial business. So will your employer know about your bankruptcy?
If you file Chapter 7 bankruptcy and you provide all the proper schedules and forms prior to filing bankruptcy your employer generally will not need to know. Consider, however, you will be required to provide the name and address of your current employer, your current position and the length of time you have worked at your current job.
If you file Chapter 13 bankruptcy, which is a reorganization bankruptcy, you will be required to send debt payments to your trustee each month for up to five years. It is common for some courts to require these payments directly from your paycheck. In this case, your employer would be notified so they can deduct your Chapter 13 debt payments from your paycheck and send it to your Chapter 13 bankruptcy trustee.
If the court does not require automatic deductions you may not need to inform your employer you have filed bankruptcy, but if you fall behind on your bankruptcy payments the trustee will contact your employer to start direct deductions from your paycheck.
Bankruptcy filings are public information
With all of that said, bankruptcy filings are public information. In the digital age this means that if someone is interested in your financial situation it may be possible for them to access the data for a nominal fee. It is also common in some communities for publications to publish the names of certain individuals who file bankruptcy. The good news, however, is that most employers will not care whether or not their employees have filed bankruptcy, and truthfully, if they did, they might have trouble finding enough employees.
Now, with that said, there are some companies and employers who will definitely care if their employees are in a financial crisis. For instance, if you work for a law enforcement agency it is likely your employer will do annual monitors of your financial situation. Any person working in law enforcement, who could be tempted to accept bribes in lieu of prosecuting criminal conduct, may have their financial history monitored.
Will bankruptcy hurt my chances of finding employment?
Another consideration is that in a tough job market there will be some employers who do care about your prior credit missteps. And it is not uncommon for some companies to look into a job applicant’s credit history to see if they are right for the job. Credit reviews help companies weed through huge application pools and it allows them to identify potential theft risks.
So what do you do if you have filed bankruptcy and you are looking for a new job? Experts suggest there are several ways to increase your chances of getting a job after bankruptcy. They suggest being honest, understand your rights, and get personal and professional recommendations.
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