Declaring bankruptcy is generally a difficult decision for anyone to take and part of the fear factor involved in the process is that it will have major and long-lasting impact on your job prospects and your career going forward.
The truth is that a declaration of bankruptcy can be viewed negatively by a potential employer but they are not legally allowed to rule you out of a particular role purely on that basis.
As to whether or not a potential employer needs to know that you’ve been bankrupt at some point in the past, the answer is not necessarily, in the sense that you are not usually legally obliged to inform them that you’ve been bankrupt. However, that isn’t to say that you can or should conceal the fact of having declared bankruptcy from a potential employer in every circumstance.
The reality for anyone who declares bankruptcy is that their having done so will be a matter of public record for a certain period of time and usually up to around 10 years. Typically, therefore, a potential employer can check your credit record at any point during that time and find out, whether you like it or not, that you have indeed declared bankruptcy.
Overcoming a debt crisis
It is important though to note that not all employers will see fit to check a potential new employee’s credit record and even when they do, it is not necessarily the case that this will count against them in a major way.
Bankruptcy laws are in place primarily so that individuals have a means of escaping what might otherwise be insurmountable debt problems in a way that gives them scope to get their finances and their life back on track. Clearly, anyone who declares bankruptcy is likely to be left with a low credit score for a period of time but there is at least an opportunity there to see that score improved and repaired gradually over time.
Different roles involve different levels of scrutiny
Some employers will routinely investigate and consider the credit history of someone applying for a job at their organisation. It can be that anyone aiming to enter a public service profession such as law enforcement for example, will find themselves the subject to the kind of scrutiny that will see the details a bankruptcy filing emerge.
For different reasons, an organisation hiring people to positions that relate directly to financial management or accounting, for example, might also decide to investigate a potential employee’s credit history and spot a bankruptcy filing as a result. But in a great many fields that have little or nothing to do with public service or financial prudence, there is no reason to expect a declaration of bankruptcy to be viewed as a worrying sign in a potential employee even where it is discovered and discussed.
In fact, bankruptcy is generally accepted and understood as being a means through which many thousands of people look to sort out their personal finances and become debt free every year in all different parts of the world. And while it is easy to understand why a job applicant would rather the matter didn’t come up in conversation with a potential employer, this does not always need to be a situation to dread. Indeed, discussing your bankruptcy in a job interview might even be viewed as an opportunity to illustrate personal growth and an ability to learn from tough lessons in life.
Unfortunately though, if you don’t take that view and you’d much rather the whole subject went overlooked entirely, there may well be nothing you can do to avoid a potential employer finding out that you have declared bankruptcy.
Getting the right advice
It is important to appreciate that entering bankruptcy is a significant step to take and one that should not be taken lightly because it can have long-lasting ramifications on anyone’s personal finances and potentially their job prospects as well.
This doesn’t change the fact though that entering bankruptcy is the best course of action for many thousands of people every year. So what’s most important for individuals dealing with serious debt problems and financial difficulties is to seek out expert advice about what their options are and what the potential ramifications of bankruptcy could be for their future.
The good news is that there are now plenty of highly qualified providers of completely impartial guidance on debt solutions around. So wherever you live and whatever your circumstances there’s every chance you will be able to find precisely the kind of advice you need on these subjects.
John Baird is a personal finance and insolvency expert from ScotlandDebSolutions.co.uk. He specialises in advising people on how to manage their money and deal with their personal debt problems.