Many people are worried about filing bankruptcy for reasons of privacy. They may be embarrassed about the proceeding’s stigma and not want people to know their actual financial situation. Many people are worried that their employer or boss may find out and somehow use this against them.
The good news is, whether you file Chapter 7 or Chapter 13, your status should not affect your employment. Keep reading to find out why.
Credit Reporting is Allowed
The Fair Credit Reporting Act allows information about your bankruptcy filing to be added and included in your credit report for ten years after your case is filed in a Chapter 7 filing, and for 7 years after a Chapter 13 filing. This time period contrasts with the seven years in which other credit information affects your credit status.
However, the information in the report cannot be released to anyone who does not have a specific purpose allowed by the Act. You must be notified about the use of the data for credit, insurance, or employment purposes when an adverse action is taken on the basis of these reports.
Will I Lose My Job?
Those who file for bankruptcy may also worry about being discriminated against after filing bankruptcy. The good news is that in most cases, this will not happen. Additionally, private employers may not end your employment or discriminate concerning future employment based upon a bankruptcy filing or discharged case.
In fact, your employer will have no way of knowing that you filed for bankruptcy unless they go looking for it. Because the records are public, if they go searching, they will find that information. However, as stated, they cannot discriminate against you regarding employment with this information.
Other Ways Your Employer May Be Notified
1. If you owe your employers money, they must be listed in the bankruptcy as creditors. All creditors must be listed in your filing, and therefore they will be notified.
2. If you file Chapter 13 and your monthly payment is going to be deducted automatically from your payroll, your employer will obviously be aware of your status. Individuals can choose to make the payment themselves without a payroll deduction.
Timing May Be Everything
For some considering bankruptcy, it may be prudent to hold off on filing bankruptcy. If you are currently “judgment proof,” meaning you do not have any property that creditors can take from you, there may be little advantage to the filing.
Also, you may want to wait to file if significant obligations will be incurred after you file. If you are waiting on a tax refund, you may want to file after that tax return is received and spent. The return may become the property of the bankruptcy estate.
If you are contemplating bankruptcy, be sure to prepare your filing “in good faith.” Good faith requires that you not take on any new debt, use your credit cards, transfer property, or attempt to conceal it from your creditors. Bankruptcy fraud is considered criminal, and can not only result in your filing being denied but also land you in prison.
Be sure to speak with an experienced bankruptcy attorney if you have any questions about what is considered legal and not legal before a bankruptcy filing.
The Sarasota and Bradenton bankruptcy law firm of Richard V. Ellis is prepared to help you understand all of your rights and obligations regarding bankruptcy filing. Call us today at (941) 351-9111 for a free consultation and to get started.
