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Can my employer find out about my bankruptcy?

On Behalf of | Oct 26, 2021 | Bankruptcy

While dealing with bankruptcy, you might wonder whether your employer can find out about your situation.

In most cases, your employer will not be in the loop, although there are some exceptions. If the company you work for learns about your bankruptcy, it cannot fire you as a result.

How could my current employer discover my bankruptcy?

While bankruptcies appear on public filings and credit reports, your employer would need to seek out this information. Most businesses do not take time to routinely check court records and credit reports for current employees. If your boss wants to pull your credit report, you would have to provide permission first.

In most cases, you are not required to inform your company about your bankruptcy, and it is not notified unless there is a specific reason.

Which bankruptcy situations involve my employer?

There are three common reasons that your employer would know about your bankruptcy.

  • Chapter 13 payroll deductions: Some Chapter 13 cases require a payroll deduction through a wage order. Your payroll department would forward the payment to the trustee.
  • Wage garnishment: If a creditor has garnished your wages, a bankruptcy might release or change the garnishment. Your payroll department processes garnishment changes.
  • Creditor notification: If your employer is one of your creditors, he or she will likely know about your bankruptcy. The court will inform your employer about the filing when it notifies all creditors.

While bankruptcies can be stressful, they provide an opportunity to restructure and reset. Knowing what to expect from your employer can help you focus on moving forward.