When is disclosing bankruptcy to an employer necessary?

In theory, per Section 525 of the U.S. Bankruptcy Code, disclosing bankruptcy to any employer is never required, and in turn, an employer is prohibited from discriminating against any employee for having filed for bankruptcy. In practice, however, things become a little trickier:

• If already employed, there is essentially nothing an employer can do to discriminate against you, or in essence, negatively affect your current employment status. However, certain occupations, such as financial officers and other positions within public companies may require disclosure of the filing.

• Any filing for bankruptcy will become public record. Even a relatively small business with few resources dedicated to monitoring employees can make a quick internet search and pull up the bankruptcy filing.

Another common area of questioning around this topic includes issues presented to prospective employees, including:

• A potential employer cannot discriminate against potential employees for having filed bankruptcy, but again, the information is public record. More often than not, the previous filing will not affect your ability to obtain most jobs, but if you are applying for a job involving financial management of company assets, accounting departments, or other similar areas, expect some unfavorable responses, albeit without a tacit acknowledgment of the reason.

• Prospective employers can check your credit history, not the score itself, but the history, which will return the bankruptcy filing. If asked about the bankruptcy filing in an interview, it will most likely benefit you to be honest upfront, and possibly explain.

For more information about your specific bankruptcy related questions, including your rights in the workplace regarding bankruptcy, consult with a bankruptcy lawyer in your state to learn more.