There is a specific law that says you cannot discriminate against someone because they filed bankruptcy. The law is 11 U.S.C. 525. That doesn’t guarantee that a prospective employer wouldn’t hold it against you, but they’re legally not supposed to that.

I think the point at which any prospective employer would care is how they perceive it reflects on “trustworthiness.” In order to get a gauge for that, employers sometimes will pull a credit report. If you file a bankruptcy and get rid of all your debts, it will show up.

But what happens if you don’t file bankruptcy? They pull that same credit report and it does not have a bankruptcy on it, but instead it has all your debts on it. If there are a bunch of them, it doesn’t look too good. And if there are a bunch of late payments reflected on the credit report, it just looks worse.

So I think that it’s basically six-in-one-half-a-dozen-in-the-other. Either you file and have that black mark on there, or you don’t file and have a whole bunch of other black marks on there.

Now, there’s another school of thought about the whole thing. A lot of people will see a bankruptcy on the credit report and– instead of holding it against you– will say “hey, here’s someone who recognized the signs of trouble and actually did something about it.” Granted, the number of people who view it this way is smaller than the number of people who see it as a bad thing. But they’re out there. In fact, I’ve had military people say that the point of their filing was not to risk losing their security clearance, but that they filed specifically as a way to KEEP their security clearance.

I know this isn’t a cut-and-dried answer but hopefully it gives you a decent perspective on the way it’s treated.

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