EFFECT OF BANKRUPTCY ON JOB SEARCH
Bankruptcy and foreclosure have long been recognized as severe drags on a person’s credit report score. A typical foreclosure filing against an individual can drag that individual’s credit score down by 250 points for 7 years. A bankruptcy filing will have the same immediate impact. However, in the case of the bankruptcy the score will begin to rise almost immediately upon discharge of the Chapter 7 or over the course of a Chapter 13 repayment Plan based upon timely payments to the secured creditors.
Our office uses a software program to predict the result of any bankruptcy filing on an individual’s credit score. While not exact, it does provide a good insight into what effect the filing will have on long term credit.
But what if an individual is applying for a job. Does it matter if the individual has filed for bankruptcy or has damaged credit? As the law is written now, the Fair Credit Reporting Act allows employers to access credit reports of potential job seekers to determine credit worthiness. It is estimated that 50% of employers access the credit reports of potential employees prior to hire.
The ability of employers to deny job seekers the opportunity for employment based upon credit has had a dramatic effect on a large number of families as a result of the recent financial crisis. Millions of Americans have suffered credit damage as a result of foreclosure, job loss, divorce and other non-merit based reasons. As a result of a general economic slowdown, an individual’s experience, education and work ethic have ceased to be determining factors in whether that individual may qualify for a particular job when employers base employment decisions on credit reporting.
Recently, however, there may be some encouraging news on this pressing issue. Legislation was recently introduced in the United States Senate to amend the Fair Credit Reporting Act to prohibit potential employers from accessing a potential employee’s credit reports or inquiring about credit status in connection with an application for employment. Sen. Elizabeth Warren recently introduced the “Equal Opportunity for All Act” in order to prohibit employers from making employment decisions based upon negative credit report items. Errors on credit reports, studies showing no correlation between credit and work ethic and past economic problems for the entire economy make this legislation important to even out the competition for jobs according to Senator Warren. See http://www.warren.senate.gov/?p=press_release&id=305
If you have bankruptcy credit impact questions, our office will be happy to assist you and answer any questions related to the effect of filing a bankruptcy on credit and other aspects of your life.
At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.
Bryan K. Mickler
