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Will Filing for Bankruptcy Affect My Job?
Your employer will probably not know that you filed for bankruptcy
Whether it’s medical bills, unexpected expenses due to a natural disaster or another reason, you may find yourself drowning in debt. Filing for bankruptcy is a way to get a fresh financial start. Sometimes people hesitate to file for bankruptcy because they think it will impact their employment and other areas of their lives. This is usually not the case. Although bankruptcy is a public court filing, it is unlikely that your current employer will find out about your bankruptcy.
However, if your bankruptcy settlement includes wage garnishment or Chapter 13 payments that are taken directly from your paycheck, your employer will find out about your bankruptcy. If you work for a large company, your boss will most likely not be told about the paycheck deductions. Either way, this should have no impact on your job.
If your employer does learn about your bankruptcy, you cannot be fired
Even if your employer does find out about your bankruptcy, it is against the law for your employer to discriminate against an employee who has filed for bankruptcy. The U.S. Bankruptcy code, which is a federal law, specifically outlines many situations where discrimination against people who have filed for bankruptcy is prohibited. This law specifically outlines that private employers may not use your bankruptcy as an excuse to:
- Terminate your employment
- Discriminate against you in employment
- Deny raises or a bonus
- Demote you or deny you a promotion
- Reduce your hours
- Limit your responsibilities
- Reprimand or discipline you
Code goes even further when it comes to government employees. In addition to
the list of prohibitions above, government agencies/employers may not use your
- Deny, revoke, suspend or refuse to renew a license, permit, charter, franchise or grant
- Deny you employment
- Deny you a student loan or grant
If you do not provide the trustee with the appropriate documentation within the appropriate timeframe, the trustee may have your bankruptcy case dismissed.
If you are unemployed, bankruptcy may impact your job search
Although government agencies cannot deny employment because of your bankruptcy, private employers can decide not to hire you if you have filed for bankruptcy. But this should not discourage you from filing for bankruptcy. A recent study found that about 72% of employers routinely do background checks on prospective employees and about 29% of employers include a credit check.
If you apply for a job where they do a credit check, your bankruptcy will show up, but so would a poor credit score. Your bankruptcy will most likely leave you with a better credit score than if you had not filed for bankruptcy.
If you have questions about bankruptcy and its impact on your employment, you should consult an experienced bankruptcy lawyer in Albuquerque.
Contact us for a free initial bankruptcy consultation
At New Mexico Financial and Family Law, we work with bankruptcy clients in the Albuquerque area and throughout New Mexico. We can help you prepare for your bankruptcy filing and protect your rights if you face job discrimination based on your debt or bankruptcy. Contact New Mexico Financial and Family Law online or call (505) 503-1637 to arrange a free initial bankruptcy consultation.
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