There are many reasons why people see bankruptcy as a last resort if they’re facing overwhelming debt. While it’s a big step that requires careful consideration, it’s crucial to separate fact from fiction so you can make a decision that is based on what’s in your long-term best interests.
One fear that many people have is that if they have a bankruptcy on their credit report, they will have difficulty getting a job or even a promotion from an employer in the future.
Protections under state and federal law
Some states have laws that consider using a person’s credit history against them in hiring and other employment decisions a type of illegal discrimination and prohibit it in most professions. Common exceptions are in financial and security or law enforcement-related jobs.
New Jersey does not prohibit employers from checking a person’s credit history. However, the New Jersey Fair Credit Reporting Act (NJFCRA) does give applicants and employees certain rights.
For example, an employer must obtain written authorization to get a background report on them. Further, employers must provide people with a copy of any report they receive if they request it. Employers must also notify current employees before taking any adverse action based on a credit report.
The Fair Credit Reporting Act (FCRA) provides many of these protections as well – for example, the requirement of written authorization to obtain a “background screening report.” This federal law applies in all states.
Be prepared to discuss your bankruptcy journey
Of course, it’s important to weigh how it will look to decline to give an employer permission to do any kind of background check because you don’t want them to find out about your bankruptcy. Instead, being prepared to discuss the reasons for your bankruptcy (for example, an unexpected and costly injury or illness, a job layoff, student loan debt that impacted your overall finances or even credit card use that got out of control). Then you can address how you took the step of filing for bankruptcy to get back – and remain — on track, and note what you’ve learned from the experience.
Remember, too, that a credit report filled with massive unpaid debts may look even worse to many employers than a past bankruptcy. Bankruptcy doesn’t carry the stigma it once did. To determine what your best solution is for dealing with your debt, it’s smart to get experienced legal guidance to review your options.