Can Filing for Bankruptcy Affect My Job?

January 23, 2025

The U.S. government allows those with overwhelming financial difficulties to declare bankruptcy as a path to financial stability—but doing so comes with consequences, and you may rightly wonder if your job security would be affected by your decision. If you have considered declaring bankruptcy and want to understand its impact on your employment situation, let our Baltimore bankruptcy lawyers at LeViness, Tolzman & Hamilton help you understand your rights and make an informed decision.

Can Your Employer Fire You Because of Bankruptcy?

Federal laws, including the Bankruptcy Code, protect employees from getting fired by their places of employment solely because they filed for bankruptcy. In addition, these laws bar employers from demoting you or denying you benefits that other employees receive because of your decision. 

Additionally, future potential employers cannot refuse to hire you solely based on your bankruptcy filing. This law especially helps new employees in the finance or public sectors, where many employers run credit checks and will likely see a bankruptcy record. 

However, if the position you are applying for potentially involves managing significant financial responsibilities, the company may use your bankruptcy to prove that you would be an active hindrance to their operations. If you need to apply for a job with stringent monetary work, prepare to explain your circumstances if asked about your financial history.

Does Bankruptcy Influence Security Clearance?

Some positions that require a security clearance might also ask you about your decision to file for bankruptcy, even if the decision itself would not automatically disqualify you. The good news is that if you achieved financial stability through your bankruptcy, you can use that process to demonstrate your newfound financial responsibility. Agencies that review security clearances often look favorably upon candidates who take proactive steps to manage debt rather than upon those who ignore financial issues. 

How Does Bankruptcy Impact Government Jobs?

Filing for bankruptcy typically does not affect your employment if you work in the public sector. Federal employees enjoy the protections given by the anti-discrimination provisions of the Bankruptcy Code, just like employees in the private sector do. However, again, if you apply for positions that require a high degree of financial oversight, you may face a higher hurdle compared to other candidates. Exercise honesty when talking about your situation and demonstrate steps that you have taken to manage your finances.

Consult with the Baltimore Bankruptcy Lawyers at LeViness, Tolzman & Hamilton to Help You Understand Your Rights and Prepare for Potential Challenges with Your Bankruptcy Situation

The decision to declare bankruptcy can help you dig your way out of overwhelming debt, but it can also have potential impacts on your career trajectory. If you have questions about the bankruptcy process, let the Baltimore bankruptcy lawyers at LeViness, Tolzman & Hamilton guide you through. Call us at 800-547-4LAW (4529) or contact us online for a free consultation. 

We have offices in Baltimore and Owings Mills, allowing us to represent clients in Maryland, including those in Anne Arundel County, Baltimore County, Carroll County, Harford County, Howard County, Montgomery County, Maryland’s Western Counties, Prince George’s County, Queen Anne’s County, Southern Maryland, and the Eastern Shore, as well as the communities of Catonsville, Essex, Halethorpe, Middle River, Rosedale, Gwynn Oak, Brooklandville, Dundalk, Pikesville, Nottingham, Windsor Mill, Lutherville, Timonium, Sparrows Point, Ridgewood, and Elkridge.