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If you’re drowning under a mountain of debt, filing bankruptcy may be your best option for a fresh financial start. Yet, you will likely have concerns about its implications on your livelihood. Since bankruptcy will affect your credit, you may fear a prospective employer will discover it while performing a background check. And you might also worry that news of your financial troubles could travel to your current employer and harm your job.

Filing bankruptcy alone may not have a negative impact on your career. But since it has the potential to, it’s important to understand why.

Holding your job

Your employer cannot terminate you based on your bankruptcy alone. Yet, if they do, they may claim their actions hinged on other, unrelated factors. Because North Carolina is an at-will employment state, your employer can fire you for any lawful reason. But if your dismissal coincides with your bankruptcy, you may be the victim of discrimination, regardless of your employer’s reasoning. By federal law, this treatment is illegal.

Finding a job

Finding employment after filing bankruptcy may prove difficult. Yet, government agencies cannot use your bankruptcy against you during the hiring process. Furthermore, government jobs that require a security clearance can be easier to get after you’ve filed bankruptcy. Since it discharged your debts, agencies may consider you a lower risk for blackmail than someone with outstanding financial issues. Yet, federal law allows private employers to apply their own discretion. When an employer runs a background check on you, they will discover your filing on your credit record. And if the job you applied for requires the handling of money, your bankruptcy could count as a red flag.

Many people who file bankruptcy can keep or find a job without a problem. Yet, you could face employment challenges for your decision. If you face discrimination for filing, it is important to act to protect yourself and your career.