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How may bankruptcy affect my employment and future job prospects?

Federal laws protect your right to remain in your current position regardless of your financial status. As noted by the Society for Human Resource Management, the U.S. Bankruptcy Code’s section 525(b) prohibits private employers from firing or discriminating against employees with debts.

Your employer may also not harass you or your spouse because of bankruptcy. The U.S. Equal Employment Opportunity Commission prohibits your employer from taking any adverse action against you after you declare bankruptcy.

How may a credit report affect my ability to work?

The EEOC prohibits discrimination against applicants based on information found in credit checks. Employers, however, may use a credit report to make a decision to hire, fire or promote candidates, as reported by

Before running a credit check, a potential employer must obtain your consent. You may then have an opportunity to explain your bankruptcy such as an unexpected job loss or a divorce.

When may I tell potential employers about a bankruptcy?

Once submitted, a bankruptcy petition becomes a public record. Disclosing it as needed could help prevent embarrassing inquiries when an employer reviews it on your credit report.

In a survey conducted by the National Association of Professional Background Screeners, 25% of HR professionals claimed to run a credit check for some positions. Six percent of survey respondents, however, disclosed that they performed credit checks on all their applicants.

Private employers may not terminate you or use bankruptcy to discriminate against you. Unless applying for positions involving law, finance or sensitive materials, you may not need to give a potential employer permission to run a credit check. Some companies, however, may have a policy to not hire employees without one.


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