Arkansas residents contemplating a bankruptcy will often ask how the filing will affect their job. With respect to one’s current job, no employer can fire or make employment decisions based on a bankruptcy filing. Furthermore, the employer will usually not even know that an individual has filed for bankruptcy.
Regarding future jobs, no government agency may use a prior bankruptcy filing in the hiring process. However, a privately owned company may obtain an applicant’s credit record to use in the hiring process. Only about 50 percent of employers will do this for the average job application.
When the job being filled is one that involves handling money and is an executive position, it is more likely that the employer will consider a prior bankruptcy. Other than that situation, however, the use of prior negative credit events in job hiring is becoming less important. Furthermore, the fact of a prior bankruptcy sometimes works to one’s benefit.
Many creditors will issue credit because there is a record of a bankruptcy. That is because the consumer is found to be a good credit risk going forward. In the same way, a prior bankruptcy discharge may show a prospective employer that the applicant has stabilized his or her financial situation. All things considered, this leaves only a small percentage of prospective employers that may adversely consider a prior bankruptcy in making a hiring decision. In all instances, the employer must get an applicant to sign a written consent form before obtaining the applicant’s credit record.
The applicant may at that point defuse a potentially negative impact by raising the subject in advance with the employer. By being forthright with the prospective employer upfront, the employer may favorably view the applicant’s character as more important than the bankruptcy reference. In Arkansas and nationwide, the resounding number of personal bankruptcies and foreclosures in the past decade has made such prior financial information less distinctive or telling than in the past. Employers generally find that they may lose a valuable job prospect by using information that is not particularly relevant in light of more important considerations.
Source: insideindianabusiness.com, “Should You Screen Hires For Credit Problems?“, Mike McCarty, Dec. 2, 2015