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The Effect of Bankruptcy on Your Career

It's natural to wonder if a bankruptcy filing will affect your career. This is an issue to keep in mind when deciding whether or not personal bankruptcy is right for you. But in cases where serious financial debt is concerned, sometimes bankruptcy is the best option.

A Private Sector Career

There are resources to help protect the employment opportunities of individuals who have recently gone through bankruptcy. However, more companies are asking for credit checks as part of the employment process. If your bankruptcy occurred within the last 10 years it will likely appear on your report. In some states, a private employer may have the right to not hire you because of a bankruptcy on your record.

However, you should keep in mind that this is just one factor. A bankruptcy record hasn't stopped Donald Trump from finding work.

If you are applying for a high-level financial position then your credit record may play a bigger role.

A Public Sector Career

The bankruptcy code protects people in the public sector as well. Companies who investigate candidates for a pubic sector position, though, may need to look deeper into the person's background and ask more prying questions, especially if a security clearance is involved.


Self-employed individuals, small business owners and entrepreneurs are often likely to turn to bankruptcy after a failed venture. While bankruptcy can provide a fresh start in this instance, it may be difficult to start up a new venture immediately after bankruptcy, particularly if it involves getting a loan or renting an office space.

Psychological Effects

A bankruptcy filing can also affect an individual’s career in a psychological sense. The stigma of what may be seen as a financial failure can interfere with an otherwise productive employee's career. Luckily, in many cases there is no need to inform a boss or coworkers of a bankruptcy filing. Likewise, since bankruptcy wipes out certain debts and ends creditors' harassment, a recent filer may feel less stress.

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