If you are considering or have been advised to file for Chapter 7 bankruptcy protection, then you are already aware — or are currently in the process of researching — the long-term consequences and implications of this decision. This article focuses on a key aspect of your future that may be affected: your job search and career.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy (a.k.a. “liquidation bankruptcy”) is the most common bankruptcy filing type in the country. If your petition is successful, the court will appoint a Bankruptcy Trustee to liquidate 100 percent of your non-exempt assets and use the sale proceeds to pay creditors an agreed upon amount. What’s more, the moment you file a petition, all creditors must seize contacting you in any manner, and all collection activity must stop as well. Under certain conditions, you may also be entitled to recover any wage garnishments that took place in the 90 days immediately prior to the bankruptcy filing.
Impact on Your Job Search/Career
It is not possible to predict how, and if so to what extent, filing for chapter 7 bankruptcy will impact your job search or overall career path. With this being said, there are some facts that can be definitively stated:
- No employer in either the public of private sector may terminate your employment because you filed for bankruptcy.
- No employer in either the public or private sector can discriminate against you in any way, explicitly or implicitly, because you filed for bankruptcy. This can include, but is not limited to, reducing your salary, denying you a promotion that you would have otherwise obtained, demoting you to a lower position (even if there is no reduction in salary or benefits), or taking away certain responsibilities or tasks (e.g. making bank deposits, auditing expenses, etc.).
- No public sector agency can automatically deny your job application because you filed for bankruptcy.
- An employer in the private sector may reject your job application if a credit check reveals a past bankruptcy, and that fact is material to the tasks/activities of the job.
Here are some additional job search and career-related insights to keep in mind as you contemplate filing for chapter 7 bankruptcy:
- The older your bankruptcy filing, the less likely it will be perceived as a deal-breaker by a prospective employer.
- It is unlikely that your current employer will find out about your bankruptcy filing (through this might be discovered by your boss if the payroll department receives a notification to cease any wage garnishment action that a creditor launched prior to your filing).
- Being proactive with a prospective employer and explaining the context of your bankruptcy filing (e.g. acrimonious divorce, massive medical/caregiver bills, emergency home repairs after a disaster etc.) can turn this into a non-issue. Being in debt is certainly not illegal or immoral.
A Final Word
One of the most important things to keep in mind — and also one of the most inspiring — is that rather than being an albatross around your neck that repels current and future employers, filing for bankruptcy can actually increase your employability, because it means you are not sinking in debt.
Indeed, most employers are much more concerned about current/prospective employees who are in deep debt, because it means they may have to secure additional employment (i.e. get a second job, which most employers frown upon and some even forbid). Employers may also be concerned that a deeply indebted employee might be more vulnerable to theft, corruption, fraud or bribery.
To learn more about the details and implications of filing for chapter 7 bankruptcy, including how it might affect various areas of your life — including but not limited to your job search and career — contact the Law Office of Charles H. Huber today.