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Will My Employer Find Out About My Bankruptcy

On Behalf of | Jul 15, 2022 | Bankruptcy Basics, Life After Bankruptcy

Are you thinking about filing bankruptcy and want to know if your employer will find out? Although all NJ bankruptcies are public record, there are only certain times that your employer will definitely find out. As you consider this path, it is important to know that laws exist that protect you from being discriminated against in the workplace because you filed bankruptcy.

Your Employer Is Not Officially Notified That You Filed Bankruptcy

After your NJ bankruptcy is filed, the Court sends an official Notice of Bankruptcy Filing to all the creditors listed in your petition.

The Court does not send the Notice to employers. If your employer is also one of your creditors, they will receive the Notice. If they are not one of your creditors then they will not.

You Don’t Need to Tell Your Employer That You Filed Bankruptcy

You are generally not required to let your employer know that you filed bankruptcy.

In rare cases, certain professional licensing authorities might require you to report a bankruptcy filing to the licensing board. This usually only occurs if you are employed in the financial industry and have certain licenses.

How Your Employer Might Learn About Your Bankruptcy

    • Your Employer Is Also One of Your Creditors

      When you file your bankruptcy, you are required to list all of your creditors to the best of your knowledge. If you owe your employer money, you will need to list them as a creditor. As a creditor, your employer will receive the official Notice of Bankruptcy Filing.

    • Your Employer Does a Credit Search

      If your employer runs a Credit Search they will see your bankruptcy filing. A bankruptcy filing generally remains on a credit report for 7 to 10 years depending on whether you file a Chapter 7 or Chapter 13 Bankruptcy.

    • Your Employer Searches Public Records

      Bankruptcies are public records. That means that your employer could search the Federal Court Pacer website to look for whether you filed a bankruptcy. There is a fee to review the documents on the Pacer website and the website is not very user friendly.

      If your employer took the time to search the public records it is likely they already thought you had filed bankruptcy.

    • The Bankruptcy Stops a Wage Garnishment

      Sometimes, your wages were being garnished before your bankruptcy was filed. When you file bankruptcy, there is an automatic stay which immediately stops your creditors from taking any collection actions against you.

      The automatic stay also stops all wage garnishments. This means that if there is a wage garnishment, your employer will be notified that they must stop garnishing your wages. This might be an indication to your employer that you filed bankruptcy.

      You should realize, however, that if you are already being garnished, your employer is aware you are in a bad financial situation. They might think that your filing bankruptcy is a positive step to improve your financial situation.

Can An Employer Take Action Because an Employee Files Bankruptcy?

No, it is expressly illegal for an employer to take action because an employee files bankruptcy, under Title 11 of the United States Bankruptcy Code, Section 525. Your employer, whether a private or government employer, is prohibited from firing you just because you filed for Bankruptcy. They are also not allowed to retaliate against you. There is an explicit law which protects you.

Contact Levitt & Slafkes For a Free Bankruptcy Consultation

For over 30 years, the attorneys at Levitt & Slafkes, P.C. have successfully and compassionately guided our clients to a brighter financial future. To schedule a free consultation contact us by telephone at 973-323-2953 or contact us online.