A couple of months ago I interviewed for a new job at a big broadcasting company. They extended a verbal offer that was contingent on successful completion of a background check. I accepted the offer, but the contingency made me really anxious. I don’t have a criminal record, and I knew there were no discrepancies in my employment history or educational background, but there’s definitely a public record of my Chapter 7, and I was concerned about its impact on my formerly strong credit history. And I had no idea whether our foreclosure would show up, since it’s been in a holding pattern for more than a year.
Now, ethically I have a huge problem with prospective employers running credit checks (and doing drug testing, but that’s a whole other rant). I can understand criminal background checks, but I believe a credit check is invasive, and that barring criminal activity, it’s none of the company’s business what you do on your own time. But despite the attempts of HR 3149, most job-seekers still have to contend with credit checks. I did want the job, so I went ahead and authorized it, but it had me worried.
I know that the law offers some protection against employment discrimination due to bankruptcy, in the form of 11 U.S.C. § 525(b). However, in a recent appeal against this, the Fifth Circuit held that while § 525(a) expressly prohibits governmental units from denying employment to a person on the basis of bankruptcy status, § 525(b) does not contain that same prohibition for private employers. And if they don’t feel like a legal battle, there’s also the very real possibility that an employer could come up with an alternative “reason” to not hire someone after finding a bankruptcy or bad credit.
I was told by my prospective employer that the background check is just a formality and that I shouldn’t worry about it. But it took a good ten days to complete, so I had plenty of time to fret over it. Thankfully, they turned out to be right. I was on the phone with the HR rep when he reviewed my background check, and he didn’t mention the bankruptcy at all. He said everything was fine, and wanted to know how soon I could start.
I did request a copy of the background check after it was complete. In addition to the standard criminal, employment, and education validation, here’s what they looked for:
- Summary of credit data: Public Records, Collections, Trade Accounts, Negative Accounts, Satisfactory Accounts, Inquiries
- Public record detail: Source, Date Reported, Docket #, Court Type, Record Type, ECOA, Liability, Assets, Amount, Date Paid, Plaintiff/ Attorney
- Tradeline detail shown for each account: MOP (status), Remarks, Opened, High Credit, Terms, Verified date, Credit Limit, Amount Past Due, Closed date, Balance, ECOA, Maximum Delinquency
Interesting note — 6 months post-discharge, ALL of my tradelines now say “Paid or paying as agreed.” They are also all listed as $0 balance, except my recent car loan and my outstanding student loan. I had 0 TLs in the Collections and Negative Accounts categories. And the foreclosure didn’t show up at all, I guess because it’s on hold and hasn’t become a public record yet. This is all as it should be, so I was happy to learn that it’s reporting accurately.
So — can bankruptcy prevent you from getting a job? Although it didn’t in my case, the answer is still yes. The Fifth Circuit says it’s legal, even though it goes against the intent of bankruptcy as a fresh start. But my experience gives me hope that employers are less concerned about it now than they used to be, and that they may be thinking more realistically about the millions of bankruptcy filers out there since the recession started. For me, being offered this new job feels like another step past last year’s unpleasantness and on the road to a happier future. I love a story with a happy ending. Now, if we could only get Tony a job too…