Will Filing Bankruptcy Hurt My Career?
Millions of Americans have filed bankruptcy since the beginning of the Great Recession. The most common reason for filing is medical debt beyond the capacity of the average working person to afford. Other top reasons for filing bankruptcy are to stop foreclosure of the family home, to prevent disconnection of utilities, and to prevent repossession of a vehicle needed for work. Many people worry about bankruptcy hurting their career, and with good reason.
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History
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Bankruptcy has historically been a last resort for debtors. The stigma of not paying your debts remains on your credit report for ten years. During the Great Depression, thousands of men committed suicide rather than face the shame of being bankrupt. This is less likely to happen today, with so many social programs in place to help those in desperate financial straits.
The Facts
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Bankruptcy helps a debtor to get a fresh start by discharging many, and possibly all, of his debts. In some ways, it can help your career as it stops the incessant phone calls from creditors to your workplace. Bankruptcy also stops financial garnishments from your paycheck, giving you more money to support your family in desperate times.
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Features
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Potential employers may run credit reports on prospective job applicants, especially if the position involves handling cash or other financial responsibilities. Some employers also run credit reports on career employees who have applied for a promotion. They may think negatively about your ability to manage corporate decisions if your credit report reflects that you cannot manage your personal financial responsibilities. The law protecting job applicants from discrimination for filing bankruptcy only applies for local, state and federal government jobs. Private employers can deny bankrupt job applicants. However, they cannot fire you if you are already working for the company.
Considerations
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There are two types of consumer bankruptcy, Chapter 7 and Chapter 13. Chapter 7 discharges all debts and is the easiest to hide from your employer. Chapter 13 details a repayment plan rather than discharging your debts. The repayment plan could involve garnishing your wages to pay the creditors. Your employer will definitely know that you have filed bankruptcy if the payroll department receives garnishment orders from the bankruptcy court. Although most people earnestly want to pay their debts, you need to consider whether garnishments will hurt your career.
Significance
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Bankruptcy may affect your career for a long time. An employer may refuse to hire you or deny a promotion for the 10 years that bankruptcy is on your credit report. You take the chance of your career stagnating during this time. The only thing in a bankrupt's favor today is the Great Recession. Millions of Americans have filed bankruptcy since 2007. Filings for individuals are up 13.8 perecen in 2010, according to Bankruptcy Action.
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References
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