Dear Bankruptcy Adviser, I filed personal bankruptcy nine years ago due to unemployment and no medical insurance when my wife was diagnosed with MS. An attorney suggested I file at the time of the diagnosis. I work in financial services and have been denied positions several times due to these disclosures. However, some larger organizations I have worked for have accepted these disclosures without question. They were happy I was forthcoming with the disclosure. Please let me know what decides these conclusions and opinions. Do I have rights if denied a position? -- George
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Dear George, Unfortunately I don't think you have rights against a private employer for denying you employment after learning that you filed for bankruptcy protection.
The bankruptcy code does address current and prospective employment discrimination against someone that files bankruptcy. The code places a higher burden on government agencies from 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.
That being said, many of my clients have found new jobs after filing. And one of the most common statements I have heard from them is that disclosing the bankruptcy immediately helped put the prospective employer at ease. That seems to be your experience, as well.
While I don't know of any bright-line rules regarding employer guidelines, I assume that disclosing past financial issues seems to disarm the prospective employer. It may humanize you in their eyes because a prospective employer may consider you less honest if the bankruptcy is uncovered during the background check. Before hiring someone, an employer must confidently believe their employees are trustworthy. A person in current or with past financial distress may be more likely to violate that trust.
Looking for a job in finance makes this all the more difficult for you. An employer will want their clients to know they are working with someone that has similar financial habits. They could also view you as a hypocrite: wanting to give your opinion on how clients should manage their finances while you were unable to manage your own.
In no way am I saying you should be ashamed of your bankruptcy filing. I do not believe past financial problems are indicative of your character or ability to provide competent advice. It is a fact that illness, divorce and unemployment are the reasons for 90% of bankruptcy filings. But being honest about your filing should help you find an employer that is OK with your past financial troubles and one that is the best fit for you.