Employer interviewing job candidate © Bill Varie/Corbis

Dear Bankruptcy Adviser,
How will my filing for bankruptcy affect my potential career advancement? I might either want to apply for a new job or try to get a higher paying position at my current company. Will that be impossible because I filed?
— Lance

© Bill Varie/Corbis

Dear Lance,
To me, your ability to handle your current financial issues will have a greater impact on your potential career advancement. People facing financial distress are more likely to be less focused at work, depressed and prone to make careless errors.

In some cases, bankruptcy may have a significantly positive impact on your ability to do your job.

I have written on the subject of jobs and bankruptcy before. In a previous Bankrate column, I wrote that the bankruptcy code does address current and prospective employment discrimination against someone who files for bankruptcy. The code places a higher burden on government agencies for using a previous bankruptcy filing as a reason for denying employment.

Courts have interpreted the bankruptcy code to say that private employers are not held to the same rigorous standard and may deny employment upon learning the applicant had filed bankruptcy.

The key is how you address the issue with your current or prospective employer. I always tell my clients to disclose the prior bankruptcy once he or she learns that the current or prospective employer will be doing a background check, including a credit check.

Explain yourself. The reason you filed can disarm the person interviewing you and humanize your situation. Then, when the bankruptcy comes up during the background check, you already have disclosed that information. It makes you appear more trustworthy.

I have never done any type of survey or researched this issue. I can only state what clients have told me over the years. Many times, a bankruptcy is better than bad or maxed-out credit. People with bad or maxed-out credit are trying to fix the problem. In many ways, bankruptcy is that fix. While rebuilding credit is challenging, it is much less difficult than trying to repair or resolve current delinquent accounts.

While you should consider whether bankruptcy will impact your future career advancement or chances at a new job, don’t let it keep you from filing. It may be the best career decision you make.

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