Despite the Great Recession being officially declared over, it’s still a tight job market. Many people remain unemployed, while others are still worried about their job security. Even some in stable jobs feel they can’t afford to take risks.

If you have debt problems, you may be avoiding filing for bankruptcy out of fear that it could affect your current job or career prospects. Will your employer be notified if you file? Could that mean you could be demoted or even fired? Don’t most companies will base their hiring decisions on your credit record?

Relax. Most people experience no job-related consequences at all from a bankruptcy. And while it’s true that bankruptcies are part of the public record, the courts won’t notify your boss.

If you file for Chapter 7, there is virtually no chance that your boss or anyone else will ever find out about your bankruptcy unless you tell them. In Chapter 13, there is a slight possibility your payroll processor could be ordered to apply a portion of your wages to certain debts, but such information is generally private.

Even if your employer does find out, you cannot legally be fired, demoted or subjected to any adverse job action based on having filed for bankruptcy.

Some companies unfortunately do take credit reports into account in hiring decisions. It’s also true that bankruptcy can hurt your ability to apply for certain professional licenses, although it generally doesn’t result in the revocation of current licenses. Good credit is a real requirement for some jobs, including some in the financial services industry. Some employers consider good credit an asset when hiring workers who will directly handle cash or expensive assets.

Outside those limited areas, the good news is that the practice of routinely pulling job applicants’ credit reports appears to be on the decline. Also, federal employers and state and local agencies in California are prohibited from taking your credit into account in hiring.

Of course, unpaid bills also affect your credit, and wage garnishments are at least as visible to your employer. If you’re chronically behind on bills, filing for bankruptcy could actually improve your credit, particularly in the long term.

If you have specific questions about how Chapter 7 or Chapter 13 could impact your career, please feel free to contact our firm.