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Can I Lose My Job If I File For Bankruptcy?

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People file for bankruptcy for different reasons, but fiscal irresponsibility is actually pretty low on that list.

That means that your employer should not really care about your financial problems.

However, the reality is a bit different, people feel apprehensive when the topic of bankruptcy is brought up, meaning it is still taboo and people associate it largely with failure.

Experts at Chang & Diamond, APC explain in detail how the process works and how much your employer can and should be involved and aware.

Anti-Discrimination Laws

There are clear anti-discrimination laws in this country which prevent your employer to fire you for an activity or state which is not directly related to your job and work performance.

These laws actually protect you from being fired if you get ill and don’t come to work for a while.

In the same vein, if you have declared for bankruptcy, that is your own personal issue which doesn’t concern anyone at your work, including your employer. That is, provided that it doesn’t affect the quality of the work you do.

Caveats to the Previous Rule

Even though the laws are clear and should apply to everyone, there are some situations where your employer may have a say in your bankruptcy case.

For instance, if you work in finances, your employer might choose to use your bankruptcy to illustrate that you are not suited for the job.

Similarly, people who work in law enforcement and have high-security clearings may be removed from work temporarily or permanently because they might pose a risk of corruption and selling secrets.

Chapter 7 Specifics

If you are filing for Chapter 7 bankruptcy, you are essentially stopping the payments to your creditors and asking the courts to protect you from them, while selling all of your non-exempt property.

In short, there is no need to notify your employer about any of that, and you may even ask your attorneys to do so.

Keep in mind, however, that if your employer wants to reassign you or promote you, they will likely look at your credit score and find out, so this can be a double-edged sword.

Chapter 13 Specifics

Chapter 13 is a very different type of bankruptcy than Chapter 7. You can read in more detail in this article https://www.thebklawyers.com/chapter-7-vs-chapter-13/.

The essence of Chapter 13 is that the whole process is going to take anywhere between 3 and 5 years, significantly increasing the chance that your employer will find out about it.

However, there is no requirement to notify your employer about the bankruptcy and it still cannot be the reason you lose your job.

The Reaction of Your Employer

If you decide to tell your employer about your bankruptcy, or they find out on their own, chances are that you will hear their reaction to the news.

In some cases, your employer may be dissatisfied that their employee is having trouble managing their finances and they might decide to skip you over when it comes to promotions in the future.

On the other hand, there are employers who feel that filing for bankruptcy is a mature thing to do when faced with a problem and might respect you more for it.

Whatever the reason for your bankruptcy is, you should know that the route to recovery is going to be a long one and that there are no shortcuts, but losing your job because of bankruptcy is not something you should be worried about.