Can Filing for Bankruptcy Affect My Job or Job Prospects?

petition to file for bankruptcy

Federal bankruptcy law gives people the right to declare personal bankruptcy and have certain debts eliminated or reduced. There is no legitimate reason for an employer or a potential employer to hold a current or previous bankruptcy against you. In fact, filing for bankruptcy should be seen as taking a responsible step toward resolving insurmountable debt.

An experienced Orlando bankruptcy lawyer at Florida Law Advisers, P.A., can help you if you are facing overwhelming debt in Florida. If filing for bankruptcy protection is right for you, we will work with you and guide you throughout the bankruptcy process to regain financial stability. First, a bankruptcy attorney will fully assess your situation and, if possible, propose personalized solutions to resolve your financial troubles without bankruptcy.

If you’re wondering, “How can bankruptcy affect my job?” we have the answers you need. Contact us today to discuss your financial situation with a bankruptcy attorney at Florida Law Advisers, P.A. Everything you discuss with an experienced bankruptcy lawyer will remain confidential. Florida Law Advisers, P.A. offers a free initial consultation. Don’t wait to seek experienced legal assistance. We are here to help you now.

Will My Employer Find Out That I Filed for Bankruptcy?

When you file for bankruptcy, you file a petition that is heard in federal court. The U.S. Bankruptcy Court for the Middle District of Florida has courtrooms in Orlando, Tampa, Fort Myers, and Jacksonville. Filing for bankruptcy, like most court proceedings, is technically a matter of public record. Anyone could find out about your bankruptcy if they were to search for it, but most people, including your employer, won’t.

Your employer will be notified of your bankruptcy if:

  • Your Paycheck Is Being Garnished to Pay Creditors – Filing for bankruptcy invokes the Automatic Stay, an injunction against your creditors that prevents them from making any further efforts to collect debt from you. This includes wage garnishment. Your employer would be notified that the garnishment of your wages had been stayed.
  • You Agree to Paycheck Deductions in a Chapter 13 Bankruptcy – Under Chapter 13, if you have current employment and are making enough money, you would propose a plan to repay debts that are not discharged or forgiven. A single payment taken from each paycheck would go to a trustee, who would divide it among creditors benefitting from the payment plan.
  • You Owe Your Employer Money—If you borrowed money from an employer and they are a creditor in your bankruptcy filing, they will be informed of your bankruptcy petition, just like your other creditors.
  • Your Employer Runs a Credit Check—The national consumer reporting agencies, Equifax, TransUnion, Experian, and others, keep up with bankruptcy filings and will keep a bankruptcy on your credit report for seven to ten years. Prospective employers regularly run credit checks on applicants, especially if they’ll be handling money for the company or accessing private consumer data. A current employer might run a check if you were being promoted or transferred into such a job.

Can My Employer Fire Me or Retaliate Against Me After Learning About My Bankruptcy?

If you’re wondering whether filing for bankruptcy can affect your job, the law provides relief.

The U.S. Bankruptcy Code (11 U.S. Code § 525(b)) provides that private employers may not terminate the employment of, or discriminate with respect to employment against, an individual solely because of their status as a debtor or as bankrupt under the bankruptcy law. Section 525(a) provides similar protections to people employed by the government.

Further, bankruptcy will not prevent you from obtaining or renewing any license, permit, charter or franchise issued by the government.

Can a Prospective Employer Refuse to Hire Me Because I Have Filed for Bankruptcy?

Unfortunately, there’s no law stopping a private employer from refusing to hire a job applicant based on their status as a debtor involved in a bankruptcy case. If a potential employer runs a credit check, they will likely find a bankruptcy filing from within the last seven to ten years. But this does not mean they will refuse to hire you.

If the job you have applied for does not involve money, a bankruptcy filing may have no impact on the hiring decision. However, the Bankruptcy Code specifically says that no government agency may “deny employment to” someone who has filed for bankruptcy or is associated with a bankruptcy.

Will I Lose My Security Clearance If I File for Bankruptcy?

According to the U.S. Department of Defense:

The purpose of a security clearance is to determine whether a person is able and willing to safeguard classified national security information based on loyalty, character, trustworthiness, and reliability. …

The adjudication process is an examination of a sufficient period of a person’s life to make an affirmative determination that the person is an acceptable security risk. … All available, reliable information about the person, past and present, favorable and unfavorable, is considered in reaching a clearance determination. When an individual’s life history shows evidence of unreliability or untrustworthiness, questions arise about whether the individual can be relied on and trusted to exercise the responsibility necessary for working in a secure environment where the protection of classified information is paramount.

If you undergo a security clearance, you can count on your bankruptcy being found. But, barring some adjacent crime that pushed you into bankruptcy, bankruptcy does not say anything negative about your character, trustworthiness, or reliability.

Job loss and medical expenses are perennially the top reasons for going bankrupt. Filing bankruptcy and dealing with your debt should improve your chances of getting or keeping security clearances. Filing for bankruptcy says you have stepped up to acknowledge and deal with a financial problem.

What to Do if Your Employer Does Retaliate for Your Bankruptcy Filing

If your employer were to fire or demote you or otherwise discriminate against you because of your bankruptcy, they would be violating federal law. In that case, you may be able to file a complaint with the Florida Commission on Human Relations (FCHR) and/or the U.S. Equal Employment Opportunity Commission (EEOC) and file a lawsuit against your employer.

In most cases, you will be required to file a complaint with the FCHR and/or the EEOC before proceeding with a lawsuit. Because a bankruptcy case touches on federal law, the EEOC would likely take over a complaint from the FCHR.

After an initial investigation, the EEOC (or FCHR) will likely attempt to settle your dispute with your employer through mediation. Whether to agree to mediate is completely voluntary. If either party turns down mediation, the complaint is to be forwarded to an EEOC investigator. If both parties agree to mediation but do not reach an agreement, the charge is to be investigated like any other charge. But if an agreement is reached during mediation, it is enforceable in court, just like any other contract.

If mediation fails but the EEOC investigator finds “cause” for the complaint, the agency will issue a Notice of Right to Sue. This gives the employee 90 days to file a lawsuit against their employer.

A lawsuit may demand:

  • Back pay, including salary plus overtime pay, bonuses, and commissions that you would have earned between your termination and the resolution of your legal claim had you not been terminated.
  • Compensation for emotional distress you suffered due to being terminated, including any mental health care expenses.
  • Reinstatement to the position you illegally lost.
  • Reimbursement of expenses you’ve incurred seeking and moving to a new job.
  • Payment of your legal fees and expenses.
  • Punitive damages, which is compensation a jury may award to punish an employer for egregious conduct and to demonstrate that such conduct will not be tolerated.

Call a Bankruptcy Attorney in Orlando, FL

Don’t be afraid to ask: “Will bankruptcy affect my job?” You deserve a chance to seek debt relief and be free of unmanageable debt without retaliation from your employer or prospective employers. Most employers understand this, so you should not let fear of retaliation stop you from seeking help for yourself.

A bankruptcy filing is not a step to be taken lightly. But it is a legal tool to make a fresh start when bankruptcy is warranted. An affordable bankruptcy lawyer at Florida Law Advisers, P.A., can help you evaluate whether bankruptcy is an appropriate option in your situation. If so, an Orlando bankruptcy lawyer can provide legal representation and help you seek a discharge of unsecured debts. We’ll help preserve your rights and keep you well-informed every step of the way.

Bankruptcy may provide you with the opportunity to start over and work toward a better financial future. Call an Orlando bankruptcy attorney from Florida Law Advisers, P.A., now to discuss your options for getting free from debt during a free and confidential consultation.

At Florida Law Advisers, P.A., we are committed to solving your divorce, bankruptcy, and immigration matters. We are a full-service law firm serving clients in Tampa, Hillsborough County, Orlando, and throughout Central Florida.