How Does Filing For Bankruptcy Affect Your Career?

It’s not unusual to start worrying about how people will see you when you go through bankruptcy. One of the most common reasons for this is how it will affect your employment. After all, your career is important. How will you ever bounce back from bankruptcy if you can’t even secure a job?

In most circumstances, it should have no impact whatsoever on your employment. There are a few reasons for this, but generally, you shouldn’t worry about your career. Here’s what happens to your job in bankruptcyHow An Experienced Bankruptcy Lawyer Can Advise You On The Risks Or Benefits Regarding Your Career

Will Bankruptcy Cost You Your Job?

It’s not lawful for any employer to dismiss you simply because of bankruptcy. Moreover, an employer cannot alter the terms of your employment because of it. This means they cannot cut your pay, demote you, or reduce your responsibilities. 

If you’re laid off just after your employer learns of your bankruptcy, and they have no other genuine reason for your dismissal, then you may have a case against them. Be sure to seek the help of an experienced attorney if you feel that you’re in this situation.

How Employers Find Out About Bankruptcy

While bankruptcy is your own matter, there are some ways that your employer may find out about it. Here are just a few examples that are worth noting.

Wage Garnishments

If you had a wage garnishment during the period prior to bankruptcy, then your employer may be notified and told that the garnishment must consequently cease. Your employer will then be aware of your bankruptcy.

Chapter 13 Payments

With a wage order when a Chapter 13 bankruptcy is filed, the judge may order that your payments are deducted from your wages directly. As a result, they can be sent to the trustee by your employer. They then become part of the bankruptcy process and will be fully aware of your status.

Debts To Your Employer

When you file for bankruptcy, you must list all your outstanding debts. If you have been previously overpaid by an employer or have any other debt to them, then you must list this in your bankruptcy paperwork. Your employer will then be automatically notified about the case.

Security Clearances & Bankruptcy

Some categories of employees have a security clearance as part of their job. These obviously include members of the security services and the armed forces. 

Other government departments may also have security clearances, and some contractors that do business with them may also come under the system. People who need security clearance for their job will often wonder if bankruptcy affects their job.

Generally, individuals who already hold a security clearance and who have no other black marks against them do not lose their clearances because of bankruptcy. Also, filing for bankruptcy will not prohibit you from getting a security clearance right away. 

Will Bankruptcy Affect Job Applications?

If your prospective employer does a credit check prior to employing you, they will see any bankruptcy in the last ten years. If you feel a credit check is likely, then it may be better to mention the bankruptcy to them, explaining the background to your filing. It’s substantially better to be transparent to them rather than hide your circumstances.

Seek Help From An Experienced Bankruptcy Attorney

Have A Broad Understanding Of How Bankruptcy Can Affect Your Career In The U.S.

It is natural to worry about your job and your career when you file for bankruptcy. If you find that your employment is in jeopardy, then you may need legal help. Lincoln-Goldfinch Law has seasoned bankruptcy attorneys who can assist in keeping your job during and after filing. The firm helps individuals who are going through bankruptcy to keep their careers. 


In general, bankruptcy won’t cost you your job. They may find out about your situation through wage garnishments, Chapter 13 payments, and your debts to them. However, your employer cannot lawfully terminate you because of bankruptcy.

In addition, bankruptcy generally does not lead to the loss of your security clearance. If you’re worried about your employment while filing for bankruptcy, seek help from a bankruptcy attorney.

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