With job loss being one of the three top causes of bankruptcy, I’m getting a lot of questions from my Indiana bankruptcy clients about getting hired for a new job with a bankruptcy on their record. I’ve been practicing bankruptcy law in Indiana for almost 33 years, and I’ve noticed a big change in hiring practices.

Used to be, before hiring employees for government work, work in the financial industry, and in gaming (jobs where you’re handling sensitive information and/or cash), a credit check was standard procedure. In most other industries, though, it was rare for pre-employment screening to include criminal background checks or full credit checks. Today, all that’s changed. According to an article in the American Chronicle, Alert Staffing reports that 50-75% of all companies review credit reports, which not only reveal bankruptcies but credit card payment history and liens.

To complicate the issue, it usually takes one or two months after a bankruptcy for the credit report to accurately reflect that debts have been discharged. That’s why it’s so important for debtors to review their credit reports and make sure mistakes get corrected. One mistake that can occur, according to the Maryland Bar Bulletin, is that a debtor will have surrendered his car in the bankruptcy. The credit report will wrongly report this as a repossession, raising a red flag with a potential employer.

The long and short of it is that finding employment after bankruptcy can be a challenge. The Fair Credit Reporting Act requires consumer reporting agencies to divulge information about job applicants when business owners so request. Obviously if drug screening and criminal background checks reveal no problems, that is a much better situation and there is a good chance interviewers will be willing to consider hiring a good employee who has come through a bankruptcy. Friends who are employed in human resources tell me that it’s best for applicants to be forthright about the bankruptcy and to offer some explanation of what led up to it. “The more honest an approach the applicant takes, the more likely it is an employer will hire based on past work performance, experience, and professional qualifications”, says Christianet.

A bankruptcy is supposed to provide a fresh financial start for individuals, and it can do just that. Job hunting simply won’t be as easy as it might have been in earlier times. As I brought out in my earlier blog, “Bankruptcy May Be The Only Way Of Getting Debt In Check”, the majority of people who arrive at one of my four bankruptcy law offices around central Indiana had been very financially responsible. They’d made their mortgage payments, their car payments, saved some for retirement, tried to teach their kids about handling money, etc.. They just couldn’t see the job layoff coming, or the high costs of an unexpected medical emergency in the family.

These people want to work and deserve every chance to prove themselves in a new job, but, let’s face it – times are tougher than at any time in my close to 33 years career. Now, remember – employers know all this, and, if you’re honest, you’ll find someone who will cut you a little slack – and put you to work!.