Can I file bankruptcy and then start a new job?

When you're unemployed, filing for bankruptcy can eliminate debt and help you get back on your feet financially. But not everything about bankruptcy is positive. Find out if a bankruptcy filing:

• will affect your ability to find a new job, and
• if a new job will affect your ability to qualify for a debt discharge.

You might also want to explore how bankruptcy works and other helpful things about bankruptcy. And check out our quick ten-question bankruptcy quiz—it can spot potential bankruptcy issues fast.

Filing for Bankruptcy Shouldn't Prevent You From Getting a New Job Offer

Private and public employers can't discriminate against a job applicant because the applicant filed for bankruptcy previously, and employers can't terminate current employees who file for bankruptcy while employed. (11 U.S.C. § 525(b).) However, when appropriate, employers can use other financial fitness criteria during the hiring process, such as good money management. So a poor credit history might preclude you from being hired even though the employer can't use the bankruptcy itself as a determinative factor.

Although this issue doesn't arise regularly, if you're concerned, consider delaying the bankruptcy filing until after securing the position.

A New Job Can Disqualify You From Bankruptcy

Suppose you've already filed for and qualified for either Chapter 7 or Chapter 13 bankruptcy. Getting a new job with a significantly higher salary could cause a problem in either chapter. Here's how:

• In Chapter 7 bankruptcy, you qualify by passing the means test, which looks at gross income six months before filing. But you'll also report your current earnings on Schedule I: Your Income. If your current earnings show you can afford to repay creditors some amount, the Chapter 7 trustee will recommend that the bankruptcy court convert your Chapter 7 case to Chapter 13.
• In Chapter 13 bankruptcy, you must pay your "disposable income" to your creditors for the plan's three- to five-year duration. An earnings increase would translate to a higher plan payment unless you originally proposed to pay your creditors 100% of what you owed. Learn how to calculate a Chapter 13 plan payment.

Don't assume that you'll be in the clear after you file your bankruptcy paperwork—you'd find you were mistaken. At the 341 meeting of creditors—the appearance almost all filers must attend—the trustee will place you under oath and ask whether anything in your bankruptcy paperwork has changed. You'll need to disclose the wage increase and provide supporting documentation. Learn more about the questions you can expect at the 341 creditor's meeting.

Navigating a Bankruptcy Case

Bankruptcy is an unusual area of law because it's essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can't skip a step.

The forms and resources below will help you find more information. Also, you can use this list of Chapter 7 and 13 bankruptcy forms to see where this topic falls. And this handy bankruptcy document checklist will help you gather the things you'll need to complete the petition.

Need More Info?

We want to help you find the answers you need. Go to TheBankruptcySite for more easy-to-understand bankruptcy articles, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by consulting with a local bankruptcy lawyer.