Will Filing for Bankruptcy Affect Your Job?

bankruptcy affect job

You might not tell anyone at work that you’re filing for bankruptcy, but your employer could find out anyway. If that happens, is your job in jeopardy?

The short answer is no – pursuing a bankruptcy claim cannot legally affect your current employment. However, depending upon your line of work, looking for a new job after bankruptcy could be more of a challenge.

You Will Not Lose Your Job as a Result of Bankruptcy

The law is clear – your employer cannot fire you simply because you’re filing for bankruptcy. This is true regardless of whether you’re a government employee or working in the private sector.

In addition, you don’t have to worry about your loved ones losing their jobs as a result of your claim. The U.S. Bankruptcy Code protects their employment, too.

Your Employer Cannot Use Bankruptcy as a Reason for Discrimination

Not only does the law prevent your boss from firing you due to a bankruptcy claim, but it also protects your current job status. Your employer cannot demote you, reduce your salary, take away responsibilities or change any of the other conditions of your employment.

Keep in mind, though, that filing for bankruptcy will not stop your boss from taking these actions – or from terminating your employment — if they have a valid reason for doing so. Just like any other worker, you could face repercussions if you’re incompetent, tardy or dishonest.

Your Professional Status Will Not Change Because of Bankruptcy

If your job requires a security clearance, you can rest easy in knowing that filing for bankruptcy will not result in your status being revoked. And actually, by resolving your financial problems, you may enhance your chances of qualifying for a higher security clearance level.

The law also protects professional licenses. You cannot be denied a new or renewal license – nor can your current license be revoked or suspended – just because you filed a claim.

Your Bankruptcy May Affect Some New Job Opportunities

The law states that federal, state and local government agencies cannot consider bankruptcy when making hiring decisions. However, private employers can take it into account – and they can deny employment based upon the fact that you filed.

That said, filing for bankruptcy doesn’t always present a problem for job seekers. Generally speaking, it’s only a factor for people applying for jobs in the financial sector and those that involve handling or having access to money. And, in many cases, being honest and upfront about a bankruptcy filing can help overcome any potential negative impressions.

Do you have other questions or concerns about filing for bankruptcy? The Law Office of Davis & Jones, P.C., serving the greater Salt Lake City area, the Wasatch Front and the surrounding counties, can offer expert answers and advice with respect to your unique situation.

With a combined 40 years of bankruptcy law experience, our legal team has already helped over 20,000 Utah residents consolidate and eliminate their debts – and we can help you get the fresh start you deserve. For a free consultation to discuss filing for bankruptcy, contact us today.