Will bankruptcy keep me from getting a job?

Unfortunately, bankruptcy can interfere with your job search, so it's best to be honest with potential employers about bankruptcy, especially employers in the private sector.
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After you filed for bankruptcy, it felt like a fresh start. You began rebuilding your credit and even started looking for a new job. Still, you're worried: Will a bankruptcy ruling show up on your credit report -- and will it be seen by potential employers?

Yes, on both counts. When a potential employer screens your credit, that employer will have access to your Social Security number, previous addresses and debt information. Along with information about student loans and mortgages, there will be information on car payments, credit card debt, debts in collection, tax liens and bankruptcies filed fewer than 10 years ago for a Chapter 7 filing or seven years ago for a Chapter 13 filing. Just about the only thing an employer won't see on your credit report is your credit score [source: Kane].


Think credit checks are only for C-suite executives? Think again. A survey of human resources professionals by the Society for Human Resources Management revealed their employers are opting to investigate the credit history of at least some -- and sometimes all -- potential employees. Not only were high-level employees credit-screened, but some surprising positions were, too: delivery drivers, office assistants, insurance salespeople, stockroom supervisors and frozen yogurt servers. You may even have your credit screened before an employer will approve you for a promotion at your existing job.

So why not say "no" to a credit check when you apply for a job? Because you won't get the job, that's why. Under federal law, it is legal for employers to perform credit checks. Under the Fair Credit Reporting Act (FCRA), employers are allowed to obtain written permission from a potential or existing employee and then request that person's credit report.

This puts employees with poor credit in a catch-22 situation: Refuse to let an employer obtain your credit report and you won't get hired; willingly share your poor credit history with employers and risk being passed over for the job.

Employers can legally use a person's credit history to deny employment, but the FCRA requires them to provide supporting documentation. In addition to providing the employee's credit report, the employer must provide a written summary of the employee's rights, as well as three to five business days to dispute credit report errors. If the employee disputes any errors, the employer must revisit the employment decision and make another ruling and notification [source: Demos].

Not all employers can peek at your credit records, though: Only employers in the private sector are allowed. Federal, state or local government agencies are not allowed to consider your bankruptcy when making a hiring decision.

If you don't decide to go after a government job, your best bet is to be upfront with a potential employer. Explain that you filed for bankruptcy and share the reasons why; like many people forced to file for bankruptcy, you may have compelling reasons or extenuating circumstances that will work in your favor [source: Elias].


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  • Demos. "Discredited: How Employment Credit Checks Keep Qualified Workers Out of a Job." (Sept. 17, 2014) http://www.demos.org/discredited-how-employment-credit-checks-keep-qualified-workers-out-job
  • Elias, Stephen. "Will Bankruptcy Affect My Job or Future Employment?" Nolo. (Sept. 17, 2014) http://www.nolo.com/legal-encyclopedia/will-bankruptcy-affect-my-job-future-employment.html
  • Kane, Libby. "Employers Cannot Check Your Credit Score." Business Insider. May 27, 2014. (Oct. 30, 2014) http://www.businessinsider.com/employers-cannot-check-your-credit-score-2014-5