Should I Be Afraid for My Career When Planning on Filing for Bankruptcy?

Stressed male and female business persons sitting at desk, hard thinking about problem. Businessman and businesswoman shocked, bad news, company bankruptcy, mistake in work, big reduction in office

I’m new to my field, and due to my poor past choices, it looks like I will be filing for bankruptcy. It’s not a move that I want to make, but I’m swimming in debt now that I have to start paying my student loans back.

What should I be concerned about when filing for bankruptcy? Should I be worried about my career?

Bankruptcy is a big step, but it’s a step that millions of people take. It’s not the end of the world, you will be able to rebuild your credit, and it’s better to go through this process when you’re younger than when you’re in retirement.

You have time to correct all of the impacts that a bankruptcy will have on your life.

It will be harder to get a mortgage loan, so this is something to consider if you plan on purchasing a home in the immediate future. Aside from this, your biggest concern should be that it’s going to be much harder to get a loan or credit for the next few years. You’ll have a stain on your credit report, but the stain will fade away, and life will go back to normal.

Student loan debt is not able to be discharged, so if you’re hoping to eliminate that pile of debt, you won’t be able to, unfortunately.

Aside from this, your employer cannot fire you.

“Anti-discrimination provisions in the Bankruptcy Code that prohibit employers from terminating employees based on their filing petitions for bankruptcy,” explains  Randolph Law Firm, P.C.

The concern will be future employment, as a bankruptcy may make it more difficult to get a job in the private sector in the future. Your current employer cannot, by law, do any of the following:

  • Demote you
  • Reduce your salary
  • Reduce your responsibilities

But if you don’t show up for work or prove to be incompetent in your position, you may be fired.

Employers that you’re currently working for may not even know that you have a bankruptcy. If you’re filing for Chapter 7, no one will know of your bankruptcy in most cases. Employers may learn of the bankruptcy if wage garnishment is stopped. If you owe the employer money, they will hear about the bankruptcy through the court.

Private employers can conduct a background check and use the bankruptcy against you. If you’re an accountant, for example, a potential employer may wonder how you mismanaged your money and not hire you.

The potential employer may not blame the bankruptcy for not hiring you, but it is a stain on your financial habits if you plan on working in the financial field.

Governments cannot use bankruptcy as a reason for not hiring an applicant. Private employers that are conducting more credit checks may ask about the circumstances leading to the bankruptcy. The biggest issue you’ll have is if you enter a field that requires you to manage money. A bookkeeper or payroll position may be much harder to secure because of your bankruptcy.

Otherwise, bankruptcy will allow you to get back on a solid financial ground moving forward.

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