Setting My Finances Straight

Chapter 13 Bankruptcy: Does It Affect Employment?

In recent years, finances have become a common topic among hiring managers. It's nothing to see a consent for a credit screening on an employment application. Given this area of newfound importance, it's natural to have concerns about the effect filing for Chapter 13 bankruptcy might have on your current and future employment endeavors.

Employer Notification

An employer is not barred from learning about your bankruptcy filing, especially if your wages are being garnished due to an unresolved debt. When you file for Chapter 13 bankruptcy, any active garnishments must be temporarily halted while the proceeding is before the court. As a result, since your employer is responsible for managing the garnishment, they must also be notified when the garnishment is suspended. Generally, you will receive notification that your employer will be notified of the garnishment suspension. 

Security Clearances

If you hold a position that requires you to maintain a security clearance, it's important to understand that there is a possibility a Chapter 13 bankruptcy can affect your employment status. A large part of maintaining a security clearance is a commitment to financial responsibility. In some instances, filing for bankruptcy might allude to a level of irresponsibility, but this notion isn't the standard. It is, however, a good idea to notify your employer of your intent to file for bankruptcy to stay ahead of the issue.  

Private Employers

Federal and state agencies are not allowed to ask information about bankruptcies on their employment applications. However, the rules are completely different when it comes to private employers. Privately owned companies can ask an applicant whether or not they have filed for bankruptcy in the past and use their answer as part of a screening tool to determine if the candidate is a good fit for the position. This type of practice is especially common for private companies in the financial sector, such as banking institutions. 

Wrongful Termination

The most important thing to remember is that, based on the law, your current employment will be protected. While an employer can be notified of the legal process and even request information about your past filing — they cannot terminate your employment solely because of the bankruptcy filing. For this reason, if you are currently employed and you are considering bankruptcy, don't let a fear of losing your position keep you from filing.  

Always remember that bankruptcy is intended to improve your situation, not hinder it. For specific questions, it's always best to speak with a bankruptcy attorney to understand what laws are in place to protect you during the process and ensure your bankruptcy is handled correctly. For more information, visit websites like

About Me

Setting My Finances Straight

After I realized that I was way behind on my rent, I knew that I had to do something. I sat down with all of my bills, and I started evaluating my personal financial situation. Things were bleak. I realized that in addition to being sent to collections by several places, I also had a terrible credit score. I didn't know how to cope. However, a friend of mine suggested meeting with a bankruptcy attorney, and so I sat down to talk with him. It was amazing to hear how much things could improve by declaring bankruptcy. Overnight, creditors stopped bothering me. This blog is all about declaring bankruptcy.