Unemployment and Bankruptcy
Searching for a job when you are faced with a dire financial situation is difficult. If you’ve opted to file for bankruptcy and you’re also exploring the job market, are there things you need to worry about when it comes to unemployment and bankruptcy?
Finding a Job After Bankruptcy
Searching for a job is one of the most stressful events in a person’s life. Even if all goes well and you land your dream job quickly, the process wears on your spirit. It’s even worse when you are struggling financially, which is a common problem faced by those who are unemployed. Facing a dire financial situation can make a job search downright devastating.
Many people in this situation take drastic measures. The loss of a job is one of the primary reasons people end up filing for bankruptcy. So in addition to their financial stress and lack of income, they are also faced with having to find a new job.
But can filing for bankruptcy affect your ability to find work?
Maybe. But that doesn’t mean you shouldn’t consider bankruptcy if you need a fresh financial start. There’s a lot to consider and what’s right for you in this situation might not work for someone else.
Employer Credit Checks are Increasingly Common
The first thing you need to know is where you stand and whether or not a potential employer will ever know that you filed for bankruptcy.
More and more employers are running credit checks on applicants these days. However, they cannot do so without your written permission. This means you’ll always know if they are going to see your credit or not.
Though any employer can request permission to run a credit check, the most common industry in which this occurs is the financial sector. If you are applying for a job in which you’ll be handling money or any sensitive financial information, you can assume a credit check will be part of the hiring process. Employers want to assess whether or not an applicant is a risk for theft. Many believe someone struggling financially poses a greater threat for unethical financial behavior.
Of course, just because you are struggling financially doesn’t mean you’re unethical. And filing for bankruptcy could put you in a better light because you’ve gotten your financial issues under control. People who file for bankruptcy have their debts discharged or participate in a payment plan. This means that assumed risk for stealing money to remedy a dire financial situation is far less likely.
An employer might have concerns about your ability to handle money responsibility if you’ve made irresponsible choices in the past, but bankruptcy doesn’t automatically disqualify you from a job. And in some cases, employers are legally barred from using bankruptcy against you in the hiring process. According to the Bankruptcy Code, federal employers cannot deny a job based on past bankruptcy. Additionally, no employer can fire you for filing for bankruptcy. You can learn about the protections available to employees here.
Honesty is the Best Policy When It Comes to Unemployment and Bankruptcy
It’s best to be upfront about your situation if you are concerned. Be proactive if you know an employer will pull your credit history and find something to hurt your chances for a job offer. They already know you are job hunting, so it stands to reason they’ll assume your income has seen a drastic change if you are currently unemployed.
Some potential employers just want to know you are honest. If you warn them about your less-than-perfect credit or that you filed for bankruptcy in the past, that’s enough to make it a non-issue. And if you explain that your goal in filing for bankruptcy was to start anew, that’s a positive spin that shows you took responsibility for your situation.
Most importantly, do not let a job search deter you from getting your financial situation back on track.