Many job applications today require background checks. If you’re one of the more than 500,000 Americans who have declared bankruptcy in the last year, you may be nervous about what a background check may reveal. You might also be asking, Do bankruptcies show up on background checks?
If you’ve previously struggled with financial issues and filed for bankruptcy, then you’re likely concerned about how this may impact your employment prospects. Our guide below will tell you what you need to know about bankruptcies and background checks.
Bankruptcy and Background Checks
There are several different kinds of background checks, such as civil court checks, criminal background checks, employment background checks, and federal bankruptcy checks. Depending on why you are having a check run on you, a prospective employer, landlord, creditor, or other party will choose which type of background check to run and may have access to different information based on that choice.
It’s important to realize that, now that so many databases are linked, information that used to be requested separately can sometimes show up on any background check.
Civil Court Checks
State and federal laws regulate information that shows up on background checks. Legally, only certain information is supposed to appear on civil court background checks. Civil court background checks are intended to reveal any civil records pulled from the local or federal level. Claims in a person’s history that may be revealed by civil background checks include family law matters, divorce, estate disputes, personal injury issues, and even car accidents. Bankruptcies should not show up on civil court background checks.
Criminal Checks
So, do bankruptcies show up on background checks of an individual’s criminal record? The answer is no. Criminal background checks shouldn’t reveal bankruptcies, as filing a bankruptcy is not a crime, and bankruptcies are not filed in any criminal court.
Employment Checks
Employment checks verify what type of past employment you have held. Past employers may be contacted and interviewed about your work ethic and performance, and dates and position titles may be verified. This type of background check will not reveal a bankruptcy.
Credit Checks
Some employers or other parties like loan officers may run credit checks on you (with permission). A credit check will show your bankruptcy history, as will information about any discharged debts as a result of the filing.
Federal Bankruptcy Search
Bankruptcy may appear on a federal bankruptcy search, which will gather information from bankruptcy courts for filings like Chapter 7, Chapter 11, and Chapter 13 bankruptcies going back no more than 10 years, as detailed under the Fair Credit Reporting Act.
Federal bankruptcy reports can reveal the:
- Case or file number
- Date it was filed
- Discharge date
- Names of petitioners
The good news is that, according to federal law, government employers may not discriminate against anyone who has filed for bankruptcy. This means that prospective employers in the federal, state, and local governments can’t refuse to hire someone simply because they filed for bankruptcy.
However, private employers are permitted to factor bankruptcies into hiring decisions, which means that some applicants who have filed for bankruptcy in the past may have issues pursuing employment with private companies.
Discuss the Background Check With an Employer
If you have any questions about what information an employer is looking for on a background check, it’s a good idea to ask when completing the application. You can take advantage of this opportunity to discuss anything negative that might appear on your background check.
It’s to your advantage to be straightforward with an employer about any blemishes on your record, including bankruptcy. Doing so shows that you’re taking responsibility for your actions.
Avoid Red Flags
When do bankruptcies show up on background checks and raise flags with prospective employers? A bankruptcy filing is most likely to be of concern to employers for a job that involves direct, easy access to finances and financial information, such as bookkeeping, accounting, and payroll services.
Although bankruptcies are unlikely to show up on background checks conducted by employers, they have an interest in trusting their employees to act responsibly in high-stakes financial positions. If a federal bankruptcy search shows that a job applicant has filed for bankruptcy within the past decade, the employer may be concerned about the applicant’s suitability for a position involving sensitive financial transactions.
Losing Employment Over a Bankruptcy
Whether bankruptcies show up on background checks may not matter if you’re already employed. The good news is that employers can’t fire you simply because you’ve filed for bankruptcy, nor can they reduce salaries, demote employees, or remove employee responsibilities based on bankruptcy status.
Although the criminal and civil check should not reveal your bankruptcy status, prospective employers may still have access to the information via a federal bankruptcy check and, depending on the type of job you’re applying for, may use this information when weighing your employment application.
Bankruptcy and Background Checks FAQ
How long does a bankruptcy last on my record?
Chapter 7 bankruptcies will remain in your record for ten years, while chapter 13 bankruptcy will remain for seven years.
Does an employer need consent to run a background check?
Generally speaking, employers do need consent from you to run background checks, but some information about you may be available via public record without consent.
What should I do if my privacy was violated?
If you feel a prospective employer or other party violated your privacy while running a background check on you, you should consult with a lawyer right away to assess whether a violation has occurred.
Get Expert Legal Counsel to Answer Additional Questions
For clear answers to questions like, Do bankruptcies show up on background checks? Consider requesting a free legal review with an experienced lawyer so they can give personalized advice on securing employment, regardless of your bankruptcy status.