Could I Lose My Job if I File Bankruptcy in Michigan?
Many people are afraid that if they file for bankruptcy they may lose their job or if they are seeking employment they may be discriminated against. It is illegal under Federal Laws to discriminate against a current or potential employee who may have filed a bankruptcy. Bankruptcies are provided for under Federal Laws and there are Federal Laws to protect those that use the system. It may surprise many people to learn that there is more discrimination against someone with bad credit who has unresolved debt issues than someone who filed a bankruptcy and worked to repair their credit.
I have had employees from local casinos lose their gaming license because of too much debt on their credit report. Those same casino employees were able to get their gaming license restored after they filed a bankruptcy and resolved their debt issue. Employers understand that employee theft is most typically need based and not greed based. Employees are more likely to steal money because of pressure from a harassing creditor that they can’t get out from underneath, rather than stealing to buy some luxury item or an electronic gadget. If you have a good stable job why would you risk losing that job unless you felt your back was up against a wall and had no alternative? Read on to get the details and understand your rights.
Bankruptcy Laws are designed to help relieve stress and financial burdens – not to create additional problems such as a job interruption. To learn more about the benefits of filing a Chapter 7 debt elimination or a Chapter 13 debt consolidation plan, call us today at 866-261-8282. We offer free consultations over the phone or in-person at any of our six Michigan office locations in: Detroit, Ann Arbor, Flint, Dearborn, Southfield and Warren.
Could I Lose My Job if I File for Bankruptcy?
The answer is No! No employer, government or private, can fire you because you file for bankruptcy protection. The bankruptcy laws also protect you from other types of job discrimination, such as the conditions of your employment. Your employer cannot:
- Reduce your salary;
- Demote you;
- Take away responsibilities, because of a bankruptcy.
Some jobs require a security clearance; do you risk losing your security clearance if you file bankruptcy? According to creditor counselors for the military and the CIA, a person who has financial problems – particularly someone with a lot of debt – is a high risk. By filing bankruptcy and getting rid of the debts, you substantially lower that risk.
Could I be Denied Employment Due to Filing a Bankruptcy?
It is a clear-cut issue if you are a government worker – the answer is no. No federal, state or local government agency may take your bankruptcy into consideration when deciding whether to hire you.
The above rule does not apply to private employers. In other words, private employers are not prohibited from discriminating in hiring because of a bankruptcy filing. But, as I have stated previously, an employer is much more likely to discriminate because of bad credit and overwhelming bills than because of a bankruptcy (again, most theft is need based and not greed based). Many private employers do conduct credit checks on job applicants. While employers need permission to run a credit check, employers can also refuse to hire you if you don’t consent. If you are asked to give authorization, we recommend being honest and up front about your circumstances. This will likely outweigh any perceived negative effects of filing a bankruptcy.
Can an Employer Discriminate Based on My Bad Credit?
There is little protection from employment discrimination based on bad credit or overwhelming debts. If you are in debt and do not resolve your financial situation, you may be leaving the door open for discrimination. If you should choose to file a Chapter 7 or Chapter 13 bankruptcy, the Bankruptcy Code provides some measure of protection from employment discrimination thereafter. In addition to this protection, you have the opportunity to resolve your debt and begin the process to improve your credit during a Chapter 13 reorganization plan or after a Chapter 7 bankruptcy filing.
The two main factors of your credit score are your:
- Debt-to-income ratio (composes 30% of your credit score): How much debt you are carrying vs. your available income to pay down.
- Recent payment history (at 35%, this factor is the highest driver of your credit score)
By filing Chapter 13 bankruptcy you will automatically be correcting both of these factors by paying down principal debt and removing all late reports to credit and preventing any creditors actions (such as judgments).
When you file a Chapter 7 bankruptcy, you are automatically clearing debt that is interfering with your credit score. The majority of our clients see an increase in their credit score within 12 months of their court discharge.
Should I File for Bankruptcy Protection?
Determining the best way to resolve your debts may seem overwhelming. There are tradeoffs and considerations for each debt resolution option.
Trust the qualified attorneys of Acclaim Legal Services to:
- Carefully review your finances;
- Consider your long-term goals;
- Discuss the pros and cons of all of your available options.
Don’t go through financial difficulties alone. Trust our firm’s combined 120 years of legal experience specializing in bankruptcy and debt resolution to help you. Call us today at 866-261-8282 for a free consultation to discuss questions and concerns. We have same day phone or in-office appointments available.