One of the most common fears people have about filing for bankruptcy is how it might affect their job or future employment. The good news is that, in most cases, bankruptcy has little to no impact on your current job and is far less of an obstacle to future employment than many people assume.
Can My Employer Fire Me for Filing Bankruptcy?
No. Federal bankruptcy law protects you from employment discrimination based solely on filing for bankruptcy.
Your current employer cannot legally:
- Fire you
- Demote you
- Reduce your pay
- Take any other adverse employment action
just because you filed for bankruptcy.
In fact, most employers won’t even know you filed unless they are listed as a creditor in your case.
Will Bankruptcy Affect Getting a New Job?
Filing for bankruptcy does not automatically disqualify you from employment. While some employers may run credit checks—particularly for positions involving finances, accounting, or security clearance—many employers are far more concerned with:
- Ongoing financial instability
- Unresolved debts
- Patterns of dishonesty or irresponsibility
A single bankruptcy filing, especially when it resolves overwhelming debt, is often viewed as a responsible step toward financial stability, not a red flag.
What About Jobs Requiring Financial Trust or Security Clearance?
For certain positions—such as government roles, defense contractors, or jobs involving access to sensitive financial information—your financial history may be reviewed more closely.
Interestingly, in these situations, filing for bankruptcy can actually help, not hurt. Unmanaged debt can create financial stress that raises concerns about vulnerability to outside pressure. Taking formal steps to address debt can demonstrate responsibility and transparency.
How Should I Address Bankruptcy With a Potential Employer?
If you are asked about a bankruptcy during the hiring process, the best approach is to be:
- Honest
- Brief
- Professional
You can explain that the bankruptcy was the result of circumstances such as:
- Medical expenses
- Divorce
- Job loss or reduced income
and emphasize the steps you’ve taken to regain financial control and move forward.
Does Bankruptcy Hurt Employment Long-Term?
For most people, the impact of bankruptcy on employment fades over time. As you rebuild credit, maintain stable finances, and continue your career, the bankruptcy becomes less relevant—especially when weighed against your experience, skills, and work history.
While bankruptcy may raise questions in certain limited roles, it is rarely an insurmountable barrier to employment.
If you have any questions about the topic discussed in this article, or any bankruptcy matter, please give us a call at Bononi & Company in Greensburg, PA 724-832-2499.