If you are unemployed or you are looking for a new job, you may be wondering whether an employer can ask you about filing for bankruptcy. Without a job, paying off the debt you owe can seem impossible, and you may not be sure what you can do to get out of debt. At the same time, you plan to keep looking for a new job, but you are worried that an interviewer may deny you employment because you filed for bankruptcy.
Many people worry about whether a potential employer can ask whether they have filed for bankruptcy, but there is no reason to worry. Employers are not allowed to dig into specific personal issues. They cannot ask whether you file for bankruptcy or if you are in the process of filing for bankruptcy. They cannot ask whether your wages were being garnished at your last job.
The Topic of Bankruptcy in Job Interviews
The primary way that your bankruptcy will come up in a job interview is if you volunteer the information. For example, suppose your potential employer asks you why you want the job for which you are interviewing. Without thinking, you say that you have been unemployed and cannot pay your bills, so you had to declare bankruptcy.
You have certain rights, and interviewers have specific legal obligations about what they can and cannot ask. There is no reason that a person cannot be a productive and effective employee if they declared bankruptcy in the past, so the fact that you have declared bankruptcy should not hinder your job search.
Do I Have to Disclose a Bankruptcy to a Potential Employer?
Bankruptcies are not confidential legal proceedings. Anyone can search for a bankruptcy proceeding because they are in the public record. However, most employers do not spend the energy looking into bankruptcies for potential employees. You will not need to talk about your bankruptcy unless it is explicitly required. For example, if you are applying for a security clearance, credit, or employment, the application may specifically ask you if you filed for bankruptcy. In that case, you do need to be honest.
However, you do not need to voluntarily tell your employer that you filed for bankruptcy in the past. Keep in mind that if your employer or potential employer does run a credit check or a public record check, they may find out about your bankruptcy. The bankruptcy trustee may send your employer a wage deduction order so your employer can withhold payment from your paycheck. Now, many job applications ask for information about prior bankruptcies, and many employers require a background check as part of the application. Nonetheless, many employers will not dig too deeply into personal matters such as your financial history.
Contact a San Diego Bankruptcy Attorney
Do you have questions about filing for bankruptcy, including whether you need to disclose your bankruptcy to a potential employer? If so, the experienced lawyers at Bankruptcy Law Center are here to help. Contact our San Diego Bankruptcy Law Firm today to learn more about how we can help you get a fresh financial start.
FAQs
You will not need to talk about your bankruptcy unless it is explicitly required. For example, if you are applying for a security clearance, credit, or employment, the application may specifically ask you if you filed for bankruptcy. In that case, you do need to be honest.
Should you tell your creditors your filing Chapter 7? ›
While you intend to file, there is no reason to tell your creditors. Instead, meet with a bankruptcy attorney as soon as possible to get your papers filed. Once filed, you will have your stay, and creditors will stop calling for payment.
What is bankruptcy discrimination? ›
Federal law forbids the government, government agencies, and private employers from discriminatory treatment against people in debt. Although an employer may discover your bankruptcy from a credit check or credit report, they cannot discriminate against you because of it.
Do creditors get mad when you file Chapter 7? ›
They don't get mad when they get your bankruptcy filing and they don't cry when they get your bankruptcy filing. Instead, they process the bankruptcy notice along with the thousands of others they get each year without an ounce of emotion about it.
Is bankruptcy the right answer? ›
The Bottom Line
Bankruptcy can be the only solution to some people's financial problems, but it isn't to be entered into lightly. Before making any decisions, it's worth consulting a reputable credit counselor and trying to negotiate with creditors to see if you can work out a payment plan.
How much debt can you have in a Chapter 7? ›
Again, there's no minimum or maximum amount of unsecured debt required to file Chapter 7 bankruptcy. In fact, your amount of debt doesn't affect your eligibility at all. You can file as long as you pass the means test. One thing that does matter is when you incurred your unsecured debt.
What happens if you forgot to list a creditor in Chapter 7? ›
Answer. It depends. Most courts, but not all, will discharge an unlisted debt if your creditors didn't receive any money in your case. However, in all jurisdictions, a defrauded creditor can ask the court to reopen your bankruptcy and hold you liable for an unlisted debt.
What is considered abuse in bankruptcy? ›
Abuse is presumed if the debtor's current monthly income over 5 years, net of certain statutorily allowed expenses and secured debt payments, is not less than the lesser of (i) 25% of the debtor's nonpriority unsecured debt, or $9,075, whichever is greater, or (ii)$15,150.
How often are bankruptcies denied? ›
“In my experience, about 15% don't even get approved. From there, they can be dismissed before the process is completed for a lot of reasons.” Why would a Chapter 7 bankruptcy be denied and how can you avoid it? Let's take a look.
Do bankruptcies show up on background checks? ›
The guidelines for how far an employer can delve into your financial history and credit report can vary from state to state. If you live in the state of California, a past bankruptcy may turn up on your background check, but it depends on two major factors: The type of bankruptcy and type of background check.
While you can travel, even on a luxury vacation, taking the following steps can help avoid complications in your bankruptcy case: Don't use any credit cards, as extra expenses will be questioned in regard to your case. If traveling overseas, obtain your trustee's consent and provide any information they request.
How long can I stay in my home after filing Chapter 7? ›
Depending upon where you live, you may be able to remain in your home for six months or more after your Chapter 7 bankruptcy has been finalized. Once your bankruptcy is discharged, you will need to find another place to live.
How quickly are creditors notified of bankruptcies? ›
How long does it take for creditors to receive notice of my bankruptcy? You and your creditors will receive a notice of the first meeting of creditors by mail within 3-5 days from the date of filing a new case as long as the list of creditors is filed with the case.
Should I be embarrassed to file bankruptcy? ›
You are not untruthful for filing bankruptcy.
While bankruptcy may hold this stigma, it is often the fact that people file bankruptcy due to reasons beyond their control – not because they are scheming the situation and totally in control of their creditors.
What do you lose if you declare bankruptcy? ›
Most people can keep household furnishings, a retirement account, and some equity in a house and car in bankruptcy. But you might lose unnecessary luxury items, like your fishing boat or a flashy car, or have to pay to keep them.
At what point is bankruptcy worth it? ›
It might be time to declare bankruptcy, if, for example, you have large debts that you can't repay, are behind in your mortgage payments and are in danger of foreclosure, or are getting calls from bill collectors. Bankruptcy can often reduce or eliminate your debts, save your home, and keep bill collectors at bay.
Do creditors usually object to Chapter 7? ›
Most bankruptcy cases pass through the bankruptcy process with little objection by creditors. Because the bankruptcy system is encoded into U.S. law and companies can prepare for some debts to discharge through it, creditors usually accept discharge and generally have little standing to contest it.
Do creditors stop contacting you after bankruptcies? ›
Something called an automatic stay takes effect the moment your bankruptcy is filed, and it does prevent your creditors from contacting you in any way in an attempt to collect the debts. The stay is a bankruptcy version of a “pause” button, allowing the court and trustee time to catalog the debts and assets.
What happens to your credit report when you file Chapter 7? ›
Debts such as child support, alimony, most student loans, and certain tax debts are typically not discharged. A Chapter 7 bankruptcy is typically removed from your credit report 10 years after the date you filed, and this is done automatically, so you don't have to initiate that removal.
Does income matter when filing bankruptcies? ›
People of all income levels can file for bankruptcy. However, Chapter 7 income limits exist, and the amount you earn often determines whether you must file for Chapter 7 or Chapter 13 to wipe out qualifying debt.
