If you’re considering filing for bankruptcy, you likely have a lot of questions and concerns about how potential unintended negative consequences on your life. One concern you may have is whether employers can find out that you have a bankruptcy on your record.
If you’re working to escape overwhelming debt and have financial stability, the ability to get and keep a good job can be critical. The good news is that, increasingly, the law protects employees’ and job applicants’ privacy when it comes to their credit and finances unless those things are applicable to their suitability for the job.
Restrictions under state and federal law
Here in Massachusetts, thanks to a law that took effect just last year, employers are largely prohibited from using credit reports and credit checks in hiring, promotion, termination and other employment decisions. The primary exceptions are for positions where a national security clearance is required or where state or federal laws require them. Financial institutions, for example, may be allowed to obtain and use this information. Law enforcement agencies may be able to as well.
While the federal Fair Credit Reporting Act (FCRA) doesn’t have the same kind of restrictions as Massachusetts’ and some other states’ laws have, it does require employers to get an applicant’s written authorization to obtain a credit report. If they do get one, they must provide the applicant or employee with a copy and disclose whether the report played a role in an employment decision.
Addressing bankruptcy with an employer if necessary
It’s crucial to know your rights and protections when it comes to what kind of information an employer can access and use against you. However, another thing to consider is that if an employer does access your credit information, rightfully or not, having a lot of debt on your record can be considered just as bad, if not worse, than having a bankruptcy on it.
Bankruptcy can be seen as evidence that you saw a problem and took action to solve it. It’s smart to be prepared if you’re seeking a new job or promotion in the future and, if the subject comes up, to be able to address it in a positive way. Many bankruptcies result from largely unavoidable circumstances, like a layoff or a serious illness.
It’s important to learn more about the types of bankruptcy available and separate fact from fiction. Getting experienced legal guidance to determine whether it’s the best solution for you is a good first step.
