A bankruptcy smudge on your credit report won't necessarily prohibit you from working in a particular field. Under the terms of the United States Bankruptcy Code, the pivotal factor isn't what careers you're barred from, but the right of an individual employer to deny a job based on your bankruptcy filing. Employers are more inclined to consider hiring job applicants who have had a bankruptcy in some professions more than in others.
Section 525 of the Bankruptcy Code specifically prohibits government employers from refusing to hire someone who has filed for bankruptcy, from firing such a person, or from discriminating against him. Therefore, you can work for any federal, state or other government agency if you've filed for bankruptcy. Unresolved debts might be a different matter, however. Even the Transportation Security Administration has stated that debts discharged in bankruptcy aren't cause for a denial of employment, though if you're badly in debt and more than four months behind in payments without filing for bankruptcy, the TSA won't hire you.
A very fine line of distinction exists between government employers and private employers in Section 525 of the Bankruptcy Code. The distinction hinges on the words "deny employment to." These words appear in the Bankruptcy Code with regard to government employers but not private employers. Private employers are barred only from terminating or discriminating against existing employees if they file for bankruptcy. As of 2011, three Circuit Courts of Appeals have ruled that private employers can deny jobs based on an applicant's bankruptcy history. These include the Eleventh, Third and Fifth Circuits and cover the states of Delaware, Georgia, Mississippi, Pennsylvania, Alabama, Florida, Louisiana, New Jersey and Texas, according to the labor law firm Fisher & Phillips. In these jurisdictions, the law allows any private company or employer to decline to hire you if you've filed for bankruptcy, regardless of your career field.
The Impact of Debt
No law exists that says you can't work in a specific field just because you've filed for bankruptcy, and having significant debt that you haven't discharged might be even worse, according to the Allmand Law firm. From a practical standpoint, drowning in debt makes you a worse candidate for employment than if you've done something about your problem and no longer have creditors pounding on your door. People who owe a lot of money -- and who have left the situation unresolved -- may be considered less trustworthy, more likely to steal, or more likely to take bribes than those without considerable debt or with managed debt. This is particularly true in careers that involve handling others' money.
Plan of Action
A potential employer can’t know that you've filed for bankruptcy unless you give him written permission to request a copy of your credit report. If you're applying to a private company, you may not be protected by the terms of the Bankruptcy Code and you might be able to avoid rejection by being honest and upfront if such a request is made. There's probably a good reason why you got in trouble financially. Explain the situation and tell the employer why it doesn’t stop you from being the best candidate for the available job.
- InsideCounsel: Employers Can Deny Job Based on Bankruptcy
- Fisher & Phillips Attorneys at Law: Considering a Job Applicant's Prior Bankruptcy Filing During the Hiring Process
- Allmand Law: Bankruptcy Does Not Prevent You From Getting Certain Jobs
- Robert Weed Law: Bankruptcy Is Better on Your Job Resume Than Bad Debt
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