You have many questions when you are thinking about filing for bankruptcy. Among the issues you should consider is the impact of bankruptcy on your job or job prospects.
For the most part, bankruptcy should not have a negative bearing on your employment. As with any legal situation, there are exceptions that you need to weigh before making a decision.
When you have a job
An employer cannot fire you because you file for bankruptcy. The federal bankruptcy code considers termination a form of illegal discrimination. The law also prohibits layoffs, demotions, reprimands and other forms of discipline due to bankruptcy. Nor can they deny a bonus.
If you feel your bankruptcy was a factor in your firing, the difficulty is proving it. Your employer can make up other reasons for letting you go. If you live in a right-to-work state, an employer does not need a reason to fire you.
When you are looking for a job
Federal laws make a distinction between people applying for private and government jobs. The government cannot “deny employment” to you because you have filed for bankruptcy. But the “deny employment” phrase is not part of the private sector law, so an employer can refuse to hire you.
Bankruptcy also opens you up to extra scrutiny when you are applying for jobs. You stand the risk of losing your professional license(s). If the job you are seeking requires a security clearance, expect extra scrutiny.
As you can see, a wide range of factors come into play. You need to weigh each of them when deciding whether bankruptcy is right for you.
When you need to make the most favorable decision
What is most important is your honesty. Your integrity is at stake. So is your future and the security of your family.
If you are not truthful about your finances, an employer can fire you. Or a prospective employer may choose to hire someone else.