Can you be Fired for Going Bankrupt?

bankruptcy employment

People tend to file for bankruptcy when they have an unmanageable amount of debt. Although it is sometimes necessary, bankruptcy is a debt solution that should always be regarded as a last resort.

Many people know that bankruptcy can affect your credit score and your assets, but can it affect your employment?

Types of Bankruptcy

Before we get started on answering this question, it seems fitting to explain the bankruptcy process in more detail; namely, the two different ways in which a bankruptcy proceeding can be initiated.

  • Involuntary bankruptcy occurs when a creditor files a petition against you in bankruptcy court and gets a judgment that allows them to foreclose on all of your assets until they are paid off.
  • Voluntary bankruptcy is when you file bankruptcy yourself because you have exceeded your limits with debt repayment, or one of your creditors has threatened legal action.

Will I Lose My Job If I File for Bankruptcy?

Filing for bankruptcy does not mean you will automatically lose your job in most cases. Certain employment sectors, however, may view bankruptcy more negatively than others. Where the ability to handle money responsibly is central to the job, such as in financial services, this is often the case.

Equally, Insolvency Practitioners are banned from their roles if they become bankrupt. The same applies to accountants and mortgage brokers. For such occupations, there will typically be a clause in their contract relating to bankruptcy and the termination of employment.

Beyond any direct consequences on employment, bankruptcy may affect your working life in other ways. For instance, if filing for bankruptcy was particularly stressful on you, it could impact your work performance. In turn, you could be left without a job for a different reason.

Do I Have to Inform My Employer?

You may or may not be required by your employer to disclose that you have filed for bankruptcy, depending on your employment contract. If it states that all bankruptcies must be disclosed, then failure to do so could result in a breach of contract. However, if your contract does not mention anything about bankruptcy then it would be up to you whether or not you want to disclose bankruptcy to your employer.

Will Bankruptcy Affect Applications for a New Job?

Although bankruptcy does not automatically prevent you from getting hired, it is public information and can be looked up by any employer. Therefore, you will need to be prepared to answer questions about bankruptcy when applying for jobs. Some employers may perform a credit check on potential new employees (particularly for jobs in financial services), but for most jobs bankruptcy should not affect your employment prospects. 

Seek Expert Advice

If you are worried about debt, bankruptcy or possible insolvency, contact Asset Solutions today on 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy. We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.