Filing for bankruptcy can provide a path toward financial relief when debts become difficult to manage. However, many Colorado residents considering Chapter 7 or Chapter 13 bankruptcy worry about how filing could affect their employment. One common concern is whether an employer can discover a bankruptcy filing and whether that information could put a job at risk.

Bankruptcy cases generally become part of the public court record, which means an employer could potentially learn that an employee filed. However, employers are subject to important federal restrictions regarding how they can treat employees because of bankruptcy.

Are Bankruptcy Filings Public Records?

Yes. Bankruptcy is a federal court proceeding, and bankruptcy case information is generally part of the public record. As a result, someone who deliberately searches federal bankruptcy court records may be able to determine whether an individual has filed.

That does not mean your employer is automatically notified whenever you file for bankruptcy. In many cases, there may be no reason for an employer to become involved in the bankruptcy process.

Certain circumstances, however, may make employer involvement more likely. For example, if wages are currently being garnished, the bankruptcy process and its automatic stay may affect the garnishment. A Chapter 13 repayment plan can also involve wage deductions in some cases.

Can a Colorado Employer Fire You for Filing Bankruptcy?

Federal bankruptcy law provides employment protections for people who file for bankruptcy.

Under 11 U.S.C. § 525, a private employer generally cannot terminate an employee or discriminate with respect to employment solely because the employee filed bankruptcy, was insolvent before or during the bankruptcy case, or failed to pay a debt that is dischargeable or was discharged in bankruptcy.

Government employers are also subject to bankruptcy discrimination restrictions. Federal law specifically prohibits governmental units from denying employment, terminating employment, or discriminating with respect to employment solely on specified bankruptcy-related grounds.

What About Applying for a New Job After Bankruptcy?

The distinction between current employment and applying for a new position can be important.

Section 525 expressly states that private employers cannot terminate or discriminate with respect to employment against an individual solely because of bankruptcy. The provision governing governmental units expressly includes denying employment among its prohibitions.

For that reason, Colorado residents concerned about how a past bankruptcy could affect a particular job application should consider discussing their circumstances with an attorney rather than assuming the rules are identical for every employer or position.

Will Bankruptcy Appear on an Employment Background Check?

Whether bankruptcy appears during the hiring process depends on the type and scope of the background or credit check being performed. Because bankruptcy filings are public records, a sufficiently broad search may reveal a previous case.

Jobs involving financial responsibilities, access to money, or certain security requirements may involve more extensive screening.

However, discovering a bankruptcy and legally using that information against an employee are separate issues.

Should You Tell Your Employer Before Filing Bankruptcy?

There is generally no reason to assume that every employee must voluntarily inform an employer before filing bankruptcy. Whether an employer becomes involved can depend on the facts of the case, including wage garnishments or payment arrangements associated with a Chapter 13 case.

Before discussing your financial circumstances at work, it may be helpful to understand how the bankruptcy process will affect your particular situation.

Bankruptcy Can Offer a Fresh Financial Start

Concerns about employment should not prevent someone from learning about the bankruptcy options available under federal law.

Chapter 7 and Chapter 13 bankruptcy can provide different forms of debt relief depending on a person's income, assets, debts, and financial circumstances.

Understanding both the financial consequences and employment-related protections associated with bankruptcy can help Colorado residents make informed decisions about their next steps.

Speak With a Colorado Bankruptcy Attorney

If you are considering bankruptcy and are concerned that your employer could discover your filing, Law Offices of Andrew F. McKenna, P.C. can provide legal assistance to individuals throughout Colorado.

A bankruptcy attorney can review your financial circumstances, explain how filing may affect wage garnishments and employment-related issues, and help you understand whether Chapter 7 or Chapter 13 may be appropriate for your situation. Contact Law Offices of Andrew F. McKenna, P.C. to learn more about bankruptcy options and protections in Colorado.