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Can filing for bankruptcy affect my job prospects?

One reason why some people hesitate to file for bankruptcy is that they fear it might make them unemployable. Businesses sometimes run credit checks on applicants, as do those considering promoting a current employee. A Chapter 13 bankruptcy will typically stay on your credit report for seven years, while a Chapter 7 will be there for ten years. 

Equal Employment Opportunity Commission (EEOC) regulations don’t allow employers to make hiring, promotion or termination decisions based on an applicant’s bankruptcy. They can do so, however, based on a person’s bad credit, which someone who has filed for bankruptcy likely had.

What kind of jobs are most likely to require good credit?

Whether or not your credit record can prevent you from getting a job depends largely on what the job is. People who work for financial institutions or who are in any position where they’re entrusted with money or valuables are more likely to have to consent to a credit check. The reason is that people with money problems could be – although not necessarily are — more tempted to steal.

Any job that requires a security clearance will likely require a credit check as well. This often includes anyone who works for the government, even as a contractor, the military and agencies like the CIA and FBI. The reasoning is that people with financial problems can be more susceptible to offers to sell secrets as well as to blackmail.

Law enforcement jobs also typically require a credit check. These professionals often have access to confiscated drugs, cash and other valuables that can be sold for a considerable amount of money.

What’s your best strategy if an employer asks permission to run a credit check?

No employer can run a credit check without your written permission. Assuming that you’re not applying for a job with the FBI or another employer where financial problems could be a deal-breaker, what should you do if asked to provide permission? 

Your best bet is to have a brief, honest explanation ready. You can say that you went through a rough period (like unemployment, divorce or illness) and bankruptcy has helped you get back on track. Don’t dwell on it. Focus on your strengths and your job history.

Having a bankruptcy on your record isn’t likely to harm you any more than the credit problems that preceded it. It’s an important step back in the right direction for your finances.