Legally reviewed by Allen A. Kolber, Esq. - The Law Offices of Allen A. Kolber, Esq., P.C.
Key Takeaways
- Your employer cannot fire or demote you for filing.
- They are unlikely to find out unless you tell them.
- Since April 2026, New York employers cannot use credit history in hiring.
- Chapter 13 wage deductions are the one thing payroll will see.
While filing for bankruptcy may be beneficial in helping your current financial situation, it may come with lingering side effects. For example, it may negatively impact your future credit score, your ability to obtain loans, and even your ability to obtain employment. Follow along to find out whether bankruptcy can impact your employment and how a proficient Rockland County bankruptcy attorney can advise you on this.
Can Filing for Bankruptcy Result in Me Losing My Job?
Rest assured, your bankruptcy will likely not affect your current employment. First of all, unless you personally told your employer that you filed, they are unlikely to independently check your bankruptcy filing status. Even though your filing will be on public record, this is a complex research process that your employer is unlikely to pursue.
Secondly, bankruptcy trustees typically do not reach out to your employer, and the court does not send a notice regarding your filing to your place of work.
Also of note, your employer is not allowed to fire you solely on the basis of a bankruptcy filing. In addition, they cannot use this as an excuse to change the terms and conditions of your employment. Examples of this are as follows:
- Your employer cannot reduce your salary solely due to your bankruptcy filing.
- Your employer cannot demote you solely due to your bankruptcy filing.
- Your employer cannot take away your job responsibilities solely due to your bankruptcy filing.
But if you do notice that, immediately after you declared bankruptcy, your employer is treating you differently, then you may have a wrongful termination and/or workplace discrimination claim on your hands.
One Way an Employer May Find Out
Chapter 13 is the exception to all of the above. Where a judge orders your plan payments deducted from your wages, your employer receives that order and administers the deduction, sending the money to your trustee. It is routine, and it carries the same protections against retaliation, but it does mean your payroll department knows.
How Might a Bankruptcy Filing Impact My Future Employment?
Luckily, federal, state, and local government agencies cannot factor in your past bankruptcy filing when deciding whether to hire you.
New York Now Restricts Private Employers Too
Though federal law has always left private hiring generally untouched, a recent change has impacted how private employers can utilize this information. An amendment to New York’s Fair Credit Reporting Act took effect on April 18, 2026, ultimately making it unlawful and discriminatory for an employer to request or use an applicant’s or employee’s credit history when making employment decisions.
The prohibition covers:
- Hiring
- Compensation
- Promotion
- Demotion
- Retention
Additionally, it reaches information about debts and bankruptcy obtained directly from you, not just what appears in a credit report. Though employers in New York City have operated under a similar local ban since 2015, the state law extends comparable protections to those in Rockland County and elsewhere.
The Exemptions Are Narrow
Some roles remain outside of the rule, and they have narrow definitions. Generally, these include:
- Positions that require a credit check conducted by other law or securities regulators
- Jobs with considerable signing authority over substantial assets
- Roles that provide access to trade secrets or classified materials
- Certain law enforcement and senior public appointments
As such, being a bookkeeper does not meet these requirements, regardless of what a prospective employer may assume.
Contact an Experienced New York Bankruptcy Firm Today
And so, if you are still unsure as to whether the pros of a bankruptcy filing outweigh the cons for your unique financial situation, you must consult with a skilled Rockland County bankruptcy attorney at the Law Offices of Allen A. Kolber, Esq. With experience on our side, we will know what the best move is for you. Contact us to schedule your initial consultation today.
