During these uncertain times, we’re all concerned about our futures. If you’ve been on unemployment, and do not have a job to return to, you may be getting into debt, and thinking about filing bankruptcy. Or, if you have continued to work, or are returning to your job, but suffered a loss of income and increased debt, you may be exploring bankruptcy as an option.
Filing bankruptcy is a serious step, and it’s good to consider all of your options, as well as the potential consequences. Under the current law, a Chapter 7 Bankruptcy will be reported on your credit history for up to 10 years; a Chapter 13 Bankruptcy will be reported for up to 7 years.
POTENTIAL EMPLOYERS AND BANKRUPTCY:
If you are searching for a job, you will want to know whether a potential employer can refuse to hire you because of a past or current bankruptcy filing.
There are different rules for public and private employers.
PUBLIC EMPLOYMENT: If you are applying for a job with a public employer, (the state or federal government, for example), the potential employer cannot refuse to hire you because of a past or current bankruptcy filing.
PRIVATE EMPLOYMENT: If you are applying for a job with a private (non-government) employer, the potential employer is allowed to refuse to hire you because of a past or current bankruptcy filing. Only one Court (New York), so far, has ruled that a private employer cannot refuse to hire you because of a bankruptcy.
CURRENT EMPLOYERS AND BANKRUPTCY:
Regardless of whether you work for a public or private employer, your current employer cannot terminate you, or otherwise discriminate against you, because of a past or current bankruptcy filing.
TAKEAWAY: If you are job-hunting in the private sector, and an application asks about bankruptcy, or a potential employer requests permission to obtain your credit report, that is legal. If you are considering bankruptcy, you might want to wait to file until you have a job. If the employer is requiring a credit report, and you do not have good credit, be honest with the potential employer; explain the circumstances which lead to your poor credit. With the Coronavirus pandemic, almost everyone has been affected financially, and if you have a legitimate reason for less than stellar credit, (illness, job loss, divorce), most employers will accept that, and appreciate that you are forthcoming.
If you are currently employed by either a public or private employer, be wary of any employer inquiries regarding bankruptcy. Document the incidents, and keep a paper trail. Unless your employer has a legitimate non-discriminatory reason for changing your employment, or terminating you, taking such action based on a bankruptcy filing is illegal.