Will Bankruptcy Affect Future Employment?

So many questions will have to be answered before a bankruptcy filing! An important one focuses on employment and your chances of keeping a job or finding a new one in the future. So, will bankruptcy affect future employment?

People experiencing financial trouble worry that they may lose their job after the bankruptcy filing. Are such worries justified? The general answer is simple –an employer cannot fire someone just because of a bankruptcy filing. Let’s look at the details.

Can You Get Fired for a Bankruptcy Filing?

The simple answer is no – an employer cannot discriminate against you on the basis of your recent bankruptcy filing.

According to the US Bankruptcy Code, employment cannot be denied or terminated because somebody was a debtor in the past or because they completed a bankruptcy filing. This rule is valid for both governmental and private employers.

Keep in mind, however, that Arizona is an at-will employment state. This means an employer can terminate the contract of an employee at any time. The details are outlined in Arizona Revised Statutes 23-1501. Thus, it may be difficult to prove that the cause of termination was discriminatory or that it was connected to somebody’s bankruptcy filing.

Generally, an employer will not find out that one of their workers has completed a bankruptcy filing. There’s no rule in Arizona that makes it mandatory to notify an employer. The only exception is a specific situation in which the employee has taken a loan from the employer.

Some individuals are particularly concerned because they’ve filed a Chapter 13 bankruptcy and they have to stick to a repayment plan.

If you are making Chapter 13 payments and you lose your job, there’s no reason to worry. The Chapter 13 payment plan is based on your disposable income. Thus, new calculations will have to be made for the purpose of determining adequate installments.

Finding a New Job after the Bankruptcy Filing

Another essential employment-related aspect that will have to be examined in connection to bankruptcy filings is finding a new job. Do people who have experienced financial troubles in the past find it more difficult to get hired again?

Federal, state and local agencies cannot consider bankruptcy filings when taking a look at job applications. The same applies to candidates for a job who are related to someone who filed bankruptcy in the past (spouses, family members, etc.).

Unfortunately, there are no such regulations when it comes to the choices being made by private employers.

Whenever a person applies for a job that has to do with money (bookkeeping, financial service provision, banking, etc.), they may be hindered by a bankruptcy in their past. When it comes to employment options in other sectors, the final decision will be left to the final discretion of the hiring agent or manager.

bankruptcy affect future employmentMany companies do run credit and background checks before hiring new employees. These records will feature the bankruptcy for a certain number of years. In some instances, such a record could raise red flags and lead to the selection of another candidate for the position.

So to sum it up, you should be capable of keeping your current job regardless of your debt and your financial status. An employer that violates these regulations (and you have proof of the violation) can be brought to court. Changing your job in the aftermath of a bankruptcy filing, however, may not be the best idea. While there may be a gainful employment option for you out there, getting hired is going to be a bit more difficult. The only exception applies to people who are applying to federal and local government positions. It is prudent to consult an experienced bankruptcy lawyer before filing bankruptcy, to know if bankruptcy affect future employment.