Will a Bankruptcy Show Up on a Background Check?

 Posted on June 30, 2022 in Bankruptcy

There are many reasons why a person may consider filing for bankruptcy. This is usually a solution for people who have extensive debts that will be difficult or impossible to fully repay, especially if they are experiencing harassment from creditors and could potentially face consequences such as wage garnishment, home foreclosure, or repossession of a vehicle or other property. Filing for bankruptcy will allow the requirement to repay certain types of debts to be completely eliminated, and it can provide much-needed financial relief. However, a bankruptcy can remain on a person’s record for a number of years. Those who are considering bankruptcy will want to understand whether background checks performed by prospective employers or others will include information about their bankruptcy filing.

Background Checks, Credit Reports, and Bankruptcy

There are multiple types of background checks that may look into a person’s criminal record, their involvement in civil court cases, and their credit history. Bankruptcy will not appear on a person’s criminal background check or a check of civil court records. However, a federal records check may uncover a bankruptcy filing within the past 10 years. A person’s credit report will also include any bankruptcy filings. A Chapter 7 bankruptcy will stay on a credit report for 10 years, and a Chapter 13 bankruptcy will be included for seven years.

Background checks are often performed by employers who are considering whether to hire someone. If an employer wishes to review a prospective employee’s credit report, they will need to obtain permission to do so. While an employer may look at a previous bankruptcy filing, federal law prohibits them from making hiring decisions solely on the basis of whether a person has filed for bankruptcy. However, there may be some situations where bankruptcies may be a consideration, such as when a person will be managing finances for a business. If a bankruptcy filing indicates that a person is financially irresponsible, this may be a factor considered during the hiring process.

Previous bankruptcies may also be considered by landlords who are deciding whether to lease property to a tenant. A landlord may perform a credit check and background check, and they may consider whether a previous bankruptcy filing will indicate that the person may not be able to make ongoing rent payments. If a person has discharged debts through bankruptcy, this may indicate that they will be able to maintain financial stability, since they will have fewer ongoing payments to make. However if a person had filed for Chapter 13 bankruptcy and is currently making payments toward a repayment plan, this may affect their ability to meet other financial obligations. To protect their interests, a landlord may ask a tenant with a history of bankruptcy to put down an additional security deposit.

Contact Our New Braunfels Bankruptcy Lawyer

If you are considering bankruptcy, you will want to understand the different ways that it may affect you both now and in the future. The Law Offices of Chance M. McGhee can advise you on the benefits and drawbacks of different types of bankruptcy, and we will work with you to pursue relief from your debts and make sure you will be able to maintain financial stability. Contact our Schertz, TX bankruptcy attorney at 210-342-3400 to schedule a free consultation and discuss your options.

Sources:

https://www.goodhire.com/resources/articles/bankruptcy-background-checks-the-complete-guide/

https://www.law.cornell.edu/uscode/text/11/525

https://www.huskerlaw.com/blog/2021/09/do-bankruptcies-show-up-on-background-checks/