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Will I Be Able to Get a Job After Bankruptcy? – Erin


“Dear Steve,

My husband has been out of work for over a year, and my current job does not pay well. So far, we’ve been able to keep up minimum payments on all our bills, but we have student loans and medical bills coming due that we are currently not able to pay. We are considering bankruptcy, but are concerned that having it on our credit report will hurt our chances of getting better-paying jobs.

How often do employers check your credit report, and how significant is a bad credit score when you’re looking for work? Will it prevent us from being hired? Thanks for your help.


Dear Erin,

I’m afraid that the bankruptcy job fear is mostly a myth that lenders love people to spread to stop them from going bankrupt. Except in certain financial positions, I have rarely seen bankruptcy prevent someone from getting any job, including those that require a security clearance.

In fact, here is what the Air Force says about bankruptcy and a security clearance.

The status of your security clearance can be affected, but it is not automatic. The outcome depends on the circumstances that led up to the bankruptcy and a number of other factors, such as your job performance and relationship with your chain of command. The security section will weigh whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility. The security section may also consider the recommendations and comments of your chain of command and co-workers. This is an issue that can be argued both ways, so as a practical matter your security clearance probably should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your clearance, even if you don’t file bankruptcy. In that sense, not filing for bankruptcy may make you more of a security risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility. Eliminating your debts through bankruptcy may make you less of a security risk.

Once I was standing in front of a credit bureau executive and I asked him what was the big deal with pushing job employment and credit reports. He said, “Steve, it just helps us to sell more credit reports.” His honesty was refreshing.

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Those people that might not get a job and who have gone bankrupt, may not get a job for some totally unrelated reason. For people that have been some life altering event that reason might be that they interview horribly.

As someone that once had 70 employees and did probably 400 interviews, I can tell you that when someone came into see me and wanted to launch into some long and drawn out story about their misfortune and why they were the victim in some life situation, I would tune out. But I would have hired all 70 employees if they had been bankrupt.

Credit reports and credit history has no proven relationship to job performance. There was recent study but as was discovered, the underlying premise was flawed to begin with.

There’s a lack of published research that would support the use of credit checks as an indicator of aspects of work performance. One might have said “complete lack” until recently. A study on the relationship between financial history and counterproductive behavior in an unnamed federal agency found a relatively small but statistically significant relationship (?[phi]=.13) between negative financial history (having a bankruptcy, tax lien, court judgment for debt, or six-month delinquency on a debt) and counterproductive work behaviors (cases at the agency involving failure to pay debts, misuse of credit cards and funds, theft, and soliciting or accepting items of value in violation of the law). The agency would not allow analysis for adverse impact. Interestingly, the authors reported that the base rate for counterproductive work behaviors in this agency was 20.6%; an expected base rate would be around 5%. (Reference: Oppler, E.S., Lyons, B.D., Ricks, D.A., and Oppler, S.H. (2008). The relationship between financial history and counterproductive work behavior. International Journal of Selection and Assessment, 16(4), 416-420.) Source

Hawaii, Connecticut, New York, Missouri, and Texas have legislation in the works that would restrict use of credit checks in pre-employment decisions.

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I had to go through a pre-employment credit check with IBM after my bankruptcy. I got the job. The only part that sucked was that I knew my manager saw my credit report. Now, looking back on it latter, so what, big deal.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


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