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How will filing for bankruptcy affect my job?

Bankruptcy is typically a consideration for people who are overwhelmed by debt and seeking a way to discharge or restructure it. If you are in this situation, the last thing you want to do is jeopardize your source of income and potentially worsen your financial situation. Many people wonder, though, whether filing for bankruptcy will have any effect on their job or future career prospects.

According to the United States Bankruptcy Court, there are more than 5,000 filings in a given year in Illinois alone. Needless to say, there would be many jobs on the line if bankruptcy directly affected a person’s employment. Still, there are a few things you should know about how it could affect your job.

Protection from discrimination

Many people do not realize that the bankruptcy code directly addresses the impact filing should have on a person’s employment. Section 525 explicitly indicates that employers cannot discriminate against employees or prospective hires because they have previously filed for bankruptcy. This means an employer can neither fire you nor deny you employment.

Professional license requirements

Though the bankruptcy code protects you from discrimination on the basis of filing, it is a condition of many positions that you hold certain qualifications, including professional licenses. When a license is a condition of employment, a bankruptcy may compromise your ability to get a license and thus the job. You should check with the licensing organization to verify their criteria, but it is often not a problem.

Results on background check

One of the other reasons you might be concerned about a bankruptcy affecting employment is the possibility that its record will appear on a background check. It is true that potential employers might learn of your bankruptcy from the results on a standard background check, but per the aforementioned bankruptcy code, they cannot legally disqualify you from employment because of this revelation.