It is not uncommon for potential bankruptcy filers to be concerned about how their filing status will affect their present and future job prospects. Bankruptcy discrimination is a legitimate concern and it may be legal in some cases.
Government employers cannot refuse to hire jobseekers because they have filed for bankruptcy. However, this rule is less clear for private employers. Appellate courts have ruled the private employers can refuse to hire jobseekers based on their bankruptcy status.
Both public and private employers cannot discriminate against existing employees who have filed. It is against the law for employers to fire employees who have filed for bankruptcy. Fortunately, your current employer is unlikely to ever discover your filing status. However, this would not be the case if you owed your employer money, as they would be included in the bankruptcy.
Can Waiting to File for Bankruptcy Cause Problems with My Employer?
If you have defaulted debts, waiting to file for bankruptcy could cause problems. Creditors may seek a judgment to garnish your wages. Your employer would be notified in this case, as they would have to comply with the order to withhold a percentage of your pay. While your employer cannot fire you for one wage garnishment, they may if you have two or more.
Potential employers may also refuse to hire you for having a poor credit rating – even if you never file for bankruptcy. Having a poor credit rating can make it more difficult to land certain types of jobs, such as those in the financial services industry.
If you are struggling with defaulted debts and wage garnishments, the Kansas City bankruptcy attorneys at The Sader Law Firm can help discuss your possible options for debt relief.