Will Chapter 13 Bankruptcy Affect My Job?

If you’re drowning in debt, you may be considering filing for Chapter 13 bankruptcy to help give you some relief from the financial burden. However, you may be wondering if this process will impact your employment status. The truth is, it depends on a variety of factors. In this blog post, we’ll dive into the details of how filing for Chapter 13 bankruptcy could potentially affect your job in North Carolina. 

1) Bankruptcy and Employment Status

Firstly, let’s clarify that your employment status cannot be used as grounds for filing bankruptcy, nor can you be terminated for simply filing for bankruptcy. The US Bankruptcy Code has specific laws in place to protect debtors from discrimination by employers. This means, generally speaking, if you file for Chapter 13 bankruptcy, it is illegal for your employer to retaliate against you by demoting, firing, or discriminating against you in any way. 

2) Bankruptcy and Specific Job Industries

While the law protects debtors from retaliation, there are some exceptions where filing for bankruptcy could impact your job. For example, if you work in certain industries like law enforcement, banking, or insurance, your employer is required to adhere to strict background checks and may view a bankruptcy on your record as a cause for concern. Similarly, if your job requires you to handle money or other financial assets, a bankruptcy could lead to trust issues with your employer. 

3) Wage Deductions

One possible negative impact of filing for Chapter 13 bankruptcy on your job is that a portion of your wages may need to be deducted every paycheck to pay off your debts. However, your employer is required to comply with the wage deductions, as well as ensure that your total compensation is still consistent with industry standards and any agreements made in your employment contract.

4) Employer Notification

When you file for Chapter 13 bankruptcy in North Carolina, your employer does not need to be notified. However, if you’re considering filing for bankruptcy and you have a garnishment or wage assignment order in place, your employer may need to be notified of the bankruptcy to adjust the payroll. And, if your debt security agreement requires employer notification, then they will need to be informed.

5) Future Employment Opportunities

Finally, while your current job may stay protected, filing for Chapter 13 bankruptcy could potentially impact future job opportunities. A bankruptcy will remain on your credit report for up to 10 years and may cause potential employers to hesitate hiring you. However, it’s important to remember that it’s not impossible to find employment after filing for bankruptcy, and employers cannot legally discriminate against you solely based on your financial situation. 

While there are some situations where filing for Chapter 13 bankruptcy could impact your job, in most cases your employment status will remain protected. It’s important to understand your workplace rights as a debtor and to work with an experienced bankruptcy attorney to help guide you through the process and ensure that your rights are protected under the law.