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Are There Any Types of Employment Affected by Filing for Bankruptcy?

Filing for bankruptcy is a significant decision that can impact various aspects of one’s life, including employment.

People contemplating Chapter 7 or Chapter 13 bankruptcy often worry about how their current or future employment might be affected.

This article explores the potential implications of bankruptcy on different types of employment, aiming to provide clarity and guidance for those facing this challenging situation.

Understanding Bankruptcy and Employment

The Basics of Bankruptcy

Bankruptcy is a legal process designed to help individuals or businesses eliminate or repay their debts under the protection of the federal bankruptcy court.

Chapter 7 and Chapter 13 are the most common forms for individuals.

Chapter 7 involves the liquidation of assets to pay off debts, while Chapter 13 allows for debt restructuring and a repayment plan.

When considering bankruptcy, one must understand how it might influence their job.

Will it affect your current position or future job prospects? The answer is not always straightforward and varies based on industry, job type, and the specifics of your bankruptcy case.

Current Employment and Bankruptcy

Job Protection

The U.S. Bankruptcy Code offers protections to individuals who file for bankruptcy.

Under Section 525(b), private employers cannot terminate your employment solely because you filed for bankruptcy.

This protection ensures that your decision to manage your financial situation through bankruptcy does not lead to job loss.

In most cases, your current employer will not be notified of your bankruptcy filing. However, if you owe money to your employer, or if wage garnishments are involved, your employer might be informed.

Generally, there’s no legal obligation to disclose your bankruptcy to your employer unless specified in your employment contract.

Impact on Future Employment

Job Applications

When applying for new jobs, be aware that some employers conduct credit checks. While it’s illegal for government employers to consider bankruptcy when making hiring decisions, private employers may use this information. They cannot discriminate solely because of bankruptcy, but it can be a factor in their decision.

Sensitive Positions

Certain positions, particularly those in finance or roles requiring security clearance, might be more sensitive to bankruptcy filings. Employers in these sectors often conduct thorough background checks, including financial history, to assess trustworthiness and reliability.

Professional Licenses

In some professions, like law or accounting, financial responsibility is crucial. Bankruptcy might raise questions about your financial management skills. However, it’s generally not a ground for denial or revocation of professional licenses.


Employment affected by bankruptcy


Chapter 7 vs. Chapter 13: Employment Considerations

Chapter 7 Implications

In Chapter 7 bankruptcy, the immediate impact on employment is minimal. However, if you hold a position where financial stability is crucial, this form of bankruptcy, which involves asset liquidation, might raise concerns among employers.

Chapter 13 and Employment

Chapter 13 bankruptcy involves a repayment plan, demonstrating an effort to manage debts responsibly. This aspect can be viewed positively by some employers, as it shows a commitment to fulfilling financial obligations.

Strategies for Minimizing Impact on Employment

If your job is sensitive to financial status, consider discussing your situation with your employer or HR department. Open communication can help mitigate concerns and demonstrate your commitment to professional responsibility.

Participating in financial counseling or education, often a requirement in bankruptcy proceedings, can be a positive step. It shows a proactive approach to improving your financial management skills.

Consult with an experienced bankruptcy attorney for guidance on how your specific case may impact your employment. They can provide advice tailored to your situation, considering your career and the type of bankruptcy you’re filing.


Filing for bankruptcy does not necessarily mean your employment will be negatively affected. Protections exist to prevent discrimination based on bankruptcy.

However, the impact varies depending on the nature of your work, the type of bankruptcy, and how you handle the situation.

By understanding your rights and being proactive in managing your professional image, you can mitigate many of the employment concerns associated with bankruptcy.

Remember, bankruptcy is a tool for financial fresh start and should not be a barrier to your professional growth and stability.

Where Can I Find Help?

Dealing with bankruptcy doesn’t have to be a single-person job. The bankruptcy lawyers at Parker & DuFresne will help you determine the best course of action to help you get out from under your debt and move forward to a debt-free future.

Call today at 904-733-7766 for a free consultation, or click the button at the top of the page to schedule online.


Florida Bankruptcy Lawyers

Parker and DuFresne

Parker and DuFresne