There is a lot of stigma surrounding bankruptcy and what it means about people who file. Regardless of how untrue these stigmas are, it’s impossible to avoid wondering how your financial past will affect your future.
Will I Lose My Current Job Due to Bankruptcy?
If you’re already employed and wondering whether your bankruptcy case will affect your employment, have no fear. NO employer can fire you for your financial status. Not only is it illegal to do so, but even changing the terms of your employment can result in a discrimination lawsuit.
- Reduce salary
- Demote or refuse to promote
- Take away responsibilities
These are discriminatory practices that are against the law. If you are fired shortly after your boss finds out about your bankruptcy, you may have an illegal discrimination case and should contact an attorney immediately.
Will My Employer Find Out About My Bankruptcy?
Employers can find out about your bankruptcy in several different ways. Keep in mind that regardless of how your employer may find out, it’s illegal to treat you differently because of it.
- Wage Garnishment: Creditors often garnish wages to get the money back. When you file for bankruptcy, wage garnishment and any other collection practices cannot continue, so there will be a notice sent to your employer about ceasing wage garnishment. You may be surprised to find that your employer may support your decisions. Most people have experienced debt at one point or another, so it’s a uniting factor that they can identify with.
- Chapter 13 Payments: Rarely, Chapter 13 bankruptcy courts may require that your payments be deducted from your wages and sent directly to the court. Your employer may be drawn into the case as a court-appointed collection agency if this happens. If you live in a jurisdiction where this is the rule, speak to your employer ahead of time.
- You Owe Money to Your Employer: If you owe money to your employer because of payroll overpayment or some other situation, you will have to list them on your bankruptcy paperwork.
In most cases, it’s best to communicate with your leaders and let them know when or if your bankruptcy case may involve them. They are more likely to be supportive of your efforts if you’re upfront than if they are drawn into your situation without warning.
It’s also highly possible that they may have struggled financially or even filed for bankruptcy themselves. If they have, they may be able to provide support and give you advice to ensure that you achieve financial stability.
Losing security clearance because of bankruptcy is a genuine concern for those working in a specialized government agency. In most cases, employers, government or private, cannot alter or eliminate your employment because of your financial status.
That said, some government agencies depend on anonymity and secrecy and grant security clearance accordingly. In the CIA, financial problems may open the door to blackmail. However, bankruptcy can help you erase those debts, which lowers the risk to your position.
Does Bankruptcy Affect My Opportunities?
Anti-discrimination laws almost always work both ways – employers cannot discriminate against prospective or existing employees for any reason, including financial status. However, there are some gray areas.
Private companies may require a credit check for all job applicants. Bankruptcy filings within the last seven years will show up on a credit check and are visible to employers. This shouldn’t affect your employment opportunities unless you are applying for a job in finance.
Fiduciaries, financial advisors, bankruptcy attorneys, and tax specialists are expected to have a comprehensive understanding of money management while practicing what they preach. If you have a history of financial troubles, you could be a weaker candidate for these positions.
It’s important to note that while bankruptcy can affect employment opportunities within the financial sector, financial responsibility is an even more critical factor. If you experienced hardship beyond your control, that’s understandable, but if you knowingly mismanaged your money, that’s another matter entirely.
Take Control Of Your Future
If you’re struggling under the weight of debt, you may find financial peace through bankruptcy. Filing is not an easy decision to make, and it’s essential to have the right information before you file.
At the Law Office of Seni Popat, P.C., we understand how scary it may be to pursue bankruptcy and the fear of what happens after you file. That’s why we provide a variety of bankruptcy services to meet your specific needs. We are committed to protecting your interests and helping you get peace of mind.
Don’t leave your finances to chance. Schedule your FREE consultation with the Law Office of Seni Popat, P.C.