You’ve been struggling to pay your bills for a while now. You’ve heard that Chapter 7 bankruptcy can give you a fresh start. But, you’re worried about how bankruptcy will affect your future employment. Will anyone hire you if you have a bankruptcy on your record?
Usually it is better to have a bankruptcy on your record and no debt than it is to have lots of debt in collections and charge offs. Most employers would rather hire someone who is not at risk of getting garnished, and has dealt with their debt through bankruptcy than someone who is in danger of getting garnished by a judgment for a charged off debt. Employers don’t want to take the time to deal with garnishments, and they are very expensive for the employer. An employee who is losing 25% of their paycheck every payday to garnishment will also be less reliable and stressed, and therefore a worse employee.
The trust is that bankruptcy IMPROVES a person’s financial stability. It lets you stop living paycheck to paycheck from debt and to start saving money again for emergencies. Employers want stable efficient employees.
Industries that Check Your Credit
Usually, only certain types of jobs will check your credit. These include positions where you:
- Are responsible for financial information, like a bookkeeper or an accountant
- Have access to consumer information
- Handle high-end or expensive merchandise
- Need a security clearance
There are some industries where your credit matters more than others. Most employers will also look at your criminal record (if you have one), your employment history, and your references.
Credit Checks and Employment
No one, including a potential employer, can run a credit check without your consent. You must give your written permission beforehand.
When an employer requests a copy of your credit report, they receive a modified version. This is called an employment credit report.
An employment credit report does not include your:
- Birthdate
- Marital status or reference to your spouse
- Account numbers
- Credit score
An employment credit report does include:
- Any Chapter 7 bankruptcy filings within the last 10 years
- Your payment record
- Amounts that you owe
- Your available credit
If you decide to file for Chapter 7 bankruptcy, you’re not alone. According to the US Federal Courts, there were over 8.5 million non-business Chapter 7 filings from 2006 to 2017. Having a bankruptcy on your record is not a rare thing, and it’s nothing to be embarrassed about.
Most of the time, filing bankruptcy leaves you with a higher score about 2 years after the bankruptcy is filed, so in the long run it is a good thing. Most of Walker & Walker’s clients have a 720 score only two years after filing the case.
Job Search Tips after Chapter 7 Bankruptcy
It’s daunting to search for a new job, especially if you’re worried about your credit. Following these tips can give you confidence and a better shot at success:
- Get a copy of your credit report. Once every 12 months, you can request a free copy of your credit report. Make sure the information is accurate. Walker & Walker will dispute any errors you find for free.
- Be honest. If a potential employer asks to check your credit, be upfront with them. Being dishonest is going to backfire on you. Lying or trying to hide your bankruptcy won’t work.
- Summarize your situation. Without divulging too much information, simply explain what happened. “You’ll see I filed for Chapter 7 bankruptcy. I had a lot of medical bills.” Your potential employer will appreciate your honesty.
Some employers may actually favor a bankruptcy filing over a lengthy “bad” credit report. Wage garnishments and accounts in collections never look good. By filing for Chapter 7, you’ve dealt with your financial problems head-on.
Don’t Put Off Filing Chapter 7 Bankruptcy
You may be tempted to put off filing for bankruptcy. You might be hopeful that you’ll be able to “turn your finances around.” The odds are good that you are putting off the inevitable.
Signs that you might need to file bankruptcy include:
- Being behind on your mortgage
- Having credit agencies call you
- Using credit cards to pay bills
Waiting will only hurt you in the long run. Chapter 7 bankruptcy falls off your credit report after 10 years. The sooner you file for bankruptcy, the sooner you can put it behind you.
The truth is, filing for bankruptcy puts you on the path for better credit. Just two years after filing for bankruptcy, most of our clients have a better credit rating than before filing.
Contact Walker & Walker Today
When you’re ready to discuss Chapter 7 and your options, contact us. We serve the entire Twin Cities metro. Our offices are in Minneapolis, St. Paul, Blaine, and Brooklyn Park. We also offer phone consultations.
Unlinked Sources:
https://www.monster.com/career-advice/article/past-bankruptcy-can-haunt-your-job-search
https://www.monster.com/career-advice/article/bad-credit-and-your-job-search
https://www.nolo.com/legal-encyclopedia/will-bankruptcy-affect-my-job-future-employment.html
