Will My Boss Find Out about Bankruptcy?

Many people are embarrassed to find themselves in financial trouble. They would do anything to keep family or friends from finding out. And they are especially worried about their boss finding out because they don’t want to lose their job.

What happens if you file for bankruptcy? Will other people find out? The quick answer is, “Possibly.”

There is no law requiring that you inform your employer of bankruptcy before filing. Nonetheless, bankruptcy is a public process. Court records are public, and many online background check companies constantly scrape court records to include in your profile. This means your boss—and anyone else, like a neighbor—could find out about the bankruptcy if they search online and buy a background report on you.

In this article, ourSan Diego bankruptcy lawyer reviews situations where your boss might find out about the bankruptcy. We also offer tips for how to manage what could be a difficult conversation.

Your Boss Can Find Out if You File for Chapter 13 Protection

Chapter 13 is a popular bankruptcy with consumers. You stick to a payment plan for three to five years, and at the end of the process the court will discharge any unpaid debts which qualify under the law.

Some courts will enter a wage withholding order, which instructs an employer to withhold a certain amount and send it to the trustee. This means your employer will find out about the bankruptcy—or at least human resources will. If you are worried about this happening, tell your lawyer, who might ask the court if we can avoid a wage order. Instead, you might cut a monthly check to the bankruptcy trustee.

Your Boss is a Creditor

This is another way they might find out. For example, your employer might have lent you money. You can’t just pay it back before filing for bankruptcy. The code doesn’t allow you to show preferences like this by picking and choosing which creditors to pay.

When you file, you’ll need to list all creditors on your paperwork. They should receive a notice after you file. If your employer is a creditor, then they’ll find out about the bankruptcy this way.

What About Future Employers?

Many employers do background checks before hiring. If you are looking for a new job, then it is highly likely the company will find out about your bankruptcy.

We won’t lie to you: some employers might consider bankruptcy a big deal. A lot depends on how recent it is. If you filed 5 years ago, that looks different than if you filed 5 months ago. Filing once looks different than filing twice.

Admittedly, some employers might not blink. But if you are applying for a job which involves handling money, then the company might reject you. They could see you as too big a risk.

How Should You Handle Discussions of Bankruptcy?

Let’s say you go to a job interview, and a question is sprung on you about bankruptcy you filed. What should you do? We recommend:

1. Be upfront. It’s better to tell the truth than to lie. Very few companies will hire someone who is dishonest.
2. Emphasize how you have changed. Employers like to see someone who is proactive at addressing their problems. For example, you can emphasize how filing for bankruptcy turned out to be a blessing because you learned to live without credit cards. You now pay for everything in cash or with debit. Or you can emphasize how you finally learned how to set a budget and live within your means, which no one had ever taught you.
3. Avoid going into too much detail. Although you want to be honest, there’s no reason to volunteer information. As an example: you might have filed for bankruptcy because you had a gambling addiction, which caused you to max out your credit cards at casinos. You don’t need to admit that. Instead, you can just say, “I was young and didn’t know how to manage my money” or “I had some unforeseen difficulties which made money tight.”
4. Stick to your payment plan. If you are currently in a Chapter 13 bankruptcy, you absolutely want to stay current with your payments. An employer might even be impressed because it shows how dedicated you are.
5. Steer the conversation back to your job skills. Don’t let the employer get hung up on your bankruptcy. Always look for an opportunity to return the discussion to the job and how you’re the right fit.

Thousands of Californians get jobs, even with a Chapter 7 or Chapter 13 bankruptcy on their history. We have other tips we can offer clients if they are concerned about how to handle a job search. Just contact us to get started on your bankruptcy today.

No Fear Bankruptcy

As experienced lawyers, we have heard many excuses for why people don’t file. Some are too embarrassed to admit they have let things get out of control, while others are worried their credit will tank. These aren’t good reasons to delay filing. In fact, it’s better to take the initiative and finally get on top of your debt. The only thing you have to lose are sleepless nights and phone calls from creditors.

At Resolve Law Firm, we take a “No Fear” approach to bankruptcy. We have helped countless people navigate the bankruptcy process, so there are few surprises. Bankruptcy is actually a very structured process overseen by a bankruptcy judge. We will always let you know ahead of time what is happening in your case, and you can reach out to us if you have questions.

Call Our San Diego Bankruptcy Lawyer Today

Resolve Law Firm empowers the San Diego community to dig out from under crushing debts and take control of their futures. This is an exciting time—you are finally ready to break free of your debt. Let us explain more about bankruptcy is a free consultation at our firm. There is absolutely no risk when reaching out by phone or email.