Will My Employer Know if I File for Bankruptcy?

Will My Job Know If I File Bankruptcy

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There are some things you simply don’t want to discuss with your employer. Politics, religion, and money immediately come to mind. But what if you reach a point at which you need to file bankruptcy? Will your employer know if you file bankruptcy?

Fortunately, your bankruptcy will more than likely remain a private matter. Although all bankruptcies are public record, the situations in which an employer will know that you have filed for bankruptcy are relatively rare.

Still, in some cases, this is a cause for concern. If you’re worried about your employer finding out about your bankruptcy, read on to learn everything you need to know. And to get help with your bankruptcy in Illinois or Missouri, reach out to the experienced attorneys at A Bankruptcy Law Firm, LLC.

Employers Aren’t Notified About Your Bankruptcy

If you’re picturing an official piece of mail that tells your employer that you have filed for bankruptcy, you can rest easy. Official bankruptcy notices to employers don’t exist. Although your employer pays your salary, that’s as far as their reach into your personal financial situation has to go. The government won’t directly notify your employer about your bankruptcy.

You Don’t Have to Tell an Employer About Your Bankruptcy

To make matters even better, you don’t have to tell your employer about your bankruptcy, either. This is considered a private financial matter. Yes, it is public record when you file bankruptcy because it involves a Missouri or Illinois court, but that does not imply that you are obligated in any way to inform your employer about your bankruptcy.

In extremely rare cases, certain professional licensing authorities may require license holders to report bankruptcies to licensing boards (but not necessarily employers). Again, this is rare and usually only comes up for employees in the financial industry.

How Employers Might Find Out About Your Bankruptcy

That’s the good news, but the bad news is that employers do sometimes find out when their employees file for bankruptcy. Will your employer know if you file for bankruptcy? To understand the likelihood, ask yourself if any of the below scenarios applies to you. Here’s how employers can find out about employees’ bankruptcies.

Searching Public Bankruptcy Records

Bankruptcies are public record. That’s because they come through the courts. Technically, that means that your employer and anyone else who was interested could search public records for a bankruptcy filing with your name on it.

But ask yourself whether they would take the time to do that. In some cases, gaining access to public records can cost money. And the systems for searching public records are often difficult to use. 

Your employer would have to be pretty nosy to take the time to search for your bankruptcy in this way. And they would have to search at the right time, meaning they would already suspect that you filed.

Ending Wage Garnishments

Sometimes, the financial events leading up to your bankruptcy will lead to wage garnishments. This is when an Illinois or Missouri court orders your employer to withhold a certain amount of your paycheck to pay back some of your creditors.

When you file for bankruptcy, all actions your creditors are taking to recover your debts are immediately stopped via the automatic stay. That means your employer will be notified that they should stop garnishing your wages. That may serve as a clear sign to your employer that you have filed for bankruptcy.

Keep in mind, however, that if you are already having your wages garnished, your employer already knows you are in a difficult financial situation. News about your bankruptcy will likely signal to them that you are taking steps to move your financial situation in the right direction.

A Chapter 13 Payroll Deduction Order

In some rare cases, your employer might find out about your bankruptcy through a payroll deduction order. This is highly similar to a wage garnishment, but it is part of the repayment plan you agreed to as part of your Chapter 13 bankruptcy

Basically, such an order would withhold part of your wages to automatically make your Chapter 13 payments to creditors. Your employer will have to know this is happening, so they could find out about your bankruptcy in this way. However, only certain jurisdictions will issue payroll dedication orders, and even then, they are quite rare.

If Your Employer Is Also One of Your Creditors

In the unique situation in which you owe money to the company you work for, your employer may find out when you file for bankruptcy. That’s because your employer is one of your creditors in that situation, and your creditors will be notified about your bankruptcy.

This is a rare scenario, and if it does happen to you, your employer may already be upset that you owe money to the company. Your filing for bankruptcy — which involves making a plan to repay some or all of your debts — is likely to be welcome news to your employer.

What Happens if Your Employer Finds Out About Your Bankruptcy?

Your employer won’t automatically know if you file for bankruptcy, but as you can see, it is possible that they will find out. But what happens if your employer finds out? In most cases, the answer is “not much.” Here’s why:

Employer Retaliation for Bankruptcy Is Illegal

Your employer likely will not care about your bankruptcy. They may care about your wellbeing and even ask about it, but they are unlikely to have a stake in the outcome of your bankruptcy. However, if they do happen to dislike the fact that you filed for bankruptcy, they will have to keep it to themselves.

That’s because it is illegal for any employer to retaliate against an employee for filing for bankruptcy. In other words, your employer can’t fire you, demote you, reduce your pay, take away your responsibilities, or make your working environment hostile in any way because of your bankruptcy. 

And if they do retaliate against you for your bankruptcy, they are opening themselves up to a workplace discrimination lawsuit. That could be extremely costly for your employer, which is why employer retaliation for bankruptcy is relatively rare.

But Future Employment Could Be Affected (in Rare Cases)

While your current employer can’t discriminate against you because of your bankruptcy, some future employers may be able to. Of course, your potential future employer will have to find out about your bankruptcy in the first place, but if they do, they may be able to refuse to hire you because of it.

However, government employers are specifically prohibited from this kind of discrimination. And private employers are rarely looking for past bankruptcies because they don’t really care about them unless you are giving financial advice as part of your job. In fact, a 2020 survey found that only 6 percent of employers checked all candidates’ credit reports — which would contain information about a bankruptcy.

In other words, it is possible that a future private employer could hire someone else because of your bankruptcy, but it is extremely unlikely. 

Filing Bankruptcy in Missouri or Illinois? Help Is Available

It’s normal to be concerned about your employer finding out about your bankruptcy. But really, whether your employer will know about your bankruptcy or not, it is unlikely to have any real impact on your employment situation.

What a bankruptcy will have an impact on, however, is your financial situation. In the vast majority of cases, that impact will be a positive one. Bankruptcy is an incredibly important avenue for Missourians and Illinoisans to find their way back to financial stability.

To put it simply, bankruptcy may be your ticket back to taking control of your life. And if you need some help along the way, you can find it at A Bankruptcy Law Firm, LLC. Our experienced bankruptcy attorneys have been helping Illinois and Missouri residents file bankruptcy for years. We can help you, too. In fact, it would be our pleasure.

To schedule a 100% free bankruptcy consultation with our firm, give us a call at (800) 7-BENSON or contact us online as soon as possible.


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