If I File For Bankruptcy, Will My Boss Know The Next Day?
It’s a question that comes to mind for a lot of people considering filing bankruptcy: will my job find out if I’ve filed? That question is generally followed by a slate of others: Who can see? Who will find out? What will they say? These are the kinds of questions that make some filers think twice, and the answer isn’t particularly cut and dried. The separation between public and private information can be a bit thin sometimes, and bankruptcy filings might be more public than some would hope.
Yes, bankruptcy filings are a matter of public record. Any time a court case is filed, it becomes a matter of public record, and that public record can be accessed by the public. For the most part, however, few people are actually interested in this information, so for the most part it goes unheard. Indeed, looking up Bankruptcy Court information not only requires registration for the access, but there are also fees involved. So between the hassle of registration and the expense of the fees, few will go to all that trouble just to see who’s filed bankruptcy lately. Those concerned about newspapers getting access to such information generally need not be; while at one time, newspapers did publish bankruptcy information as a means to notify creditors, these days, such a task is accomplished with a direct mailing.
However, a Chapter 13 bankruptcy filing is commonly the version most heard about by employers; since Chapter 13 bankruptcy requires a repayment plan, verifying income can be a part of that. Chapter 7 filings don’t require a plan, so there, if the bankruptcy is filed sufficiently rapidly, an employer may never hear about it. There is an exception in this, however; if a creditor files suit against you, gets a judgment, or otherwise is able to start garnishing wages, then your employer will necessarily hear about it, particularly if your employer processes payroll directly. Still, this may not be such an issue; in some cases, a business finding out one of its employees is taking positive action to address financial problems in his or her life can be regarded as a good thing.
That’s in some cases, of course; in others, it’s a different matter. It is absolutely illegal for a business to refuse to hire someone based on a bankruptcy filing. It is not, however, illegal to refuse to hire someone because they have bad credit. Indeed, the chances of a business coming out and directly admitting that a person was fired, or wasn’t hired, for an illegal reason is virtually nil. Thus, even after someone files a bankruptcy, that person may be fired, or not hired, for a completely unrelated reason that is legal.
Firms are using credit histories increasingly often as a means to determine if a person is a “good fit” for a company, a general catch-all term which can mean virtually anything. Some businesses regard employees who have had problems with debt in the past as more likely to steal from their employers, and in a bid to protect themselves, deny employment to those people. Problems with debt, and bankruptcy, can mean anything from “had an overwhelming medical issue” to “was a problem gambler”, and since there’s commonly no way to tell which is which, employers would rather not get involved in the first place. It’s a “sad, but true” sort of situation, and though candor can be helpful here—as can a number of recommendations from previous bosses or clients—even getting to the interview portion might not be easy, or even possible in a high-unemployment economy.
We like to think of a bankruptcy as a deeply personal matter, one that our employers wouldn’t know about. In many cases, that’s possible, but in some, it’s not. For the most part, few will note, or care, that a person has filed for bankruptcy. Those times when someone does take note, however, can be the worst times of all.