When Do I Need to Disclose a Bankruptcy?

Legal Tips and Resources

When you file for bankruptcy it becomes a matter of public record meaning anyone is able to search for and view the record. It stays on your credit report for as long as ten years. There are ways to shorten that time depending on the type of bankruptcy you file. When is it required to disclose a bankruptcy?

Even if you are not asked about a bankruptcy, anyone who runs a credit check on you will discover the filing. If you applying for a job and they do not ask, they may still find out about the bankruptcy simply by running your credit. There are certain situations that may require you to disclose the fact that you filed for bankruptcy.

Security Clearances

Generally, filing for bankruptcy should not affect your security clearance. Why you filed for bankruptcy may be of concern depending on the answer.

Filing for bankruptcy actually makes you look less of a security risk than having debt issues and not addressing a solution.

The security clearance application form requires you to detail your finances, thus exposing any debt issues. The question then becomes how are you handling your debt? Filing for bankruptcy can consolidate or eliminate debt, restructure loans and force you to become more intentional in taking care of financial issues. It can also lower your temptation to try to take care of your debt in perhaps less than ethical means.

Military Security Clearances

If you are interested in joining the military, you will have to disclose any bankruptcies on your application. A credit check will also be performed depending on which branch of the service you wish to apply to. Your recruiter can give you more information about the effects of filing for bankruptcy and your application.

If you are already in the military, a bankruptcy could negatively impact your current security clearance. Several factors may be taken into account in addition to the actual bankruptcy filing, such as:

  • The reason for filing bankruptcy
  • The level of security clearance you currently possess
  • Performance on the job
  • How you work with your superiors and coworkers

Consult the specific department or personnel who can answer your questions about the effect bankruptcy will have on your security clearance or military career prior to filing.

Does Your Current Employer Have to Know About Your Bankruptcy?

You are not obligated to tell your employer about your bankruptcy. Because it is a matter of public record, they would be able to find out if they were to do a search or run your credit. If you file Chapter 13, your wages may be a part of your payment plan. In that case, your employer will definitely know about your bankruptcy.

Credit or Employment Applications

Always be honest and disclose if it is addressed on a job or credit application. Lying about the bankruptcy on an employment application can cause an employer concern and you will likely not get the job.

Lying on a credit card application will not be beneficial as most credit card companies will run a credit check for a new card and find your bankruptcy. Lying on these forms is considered fraudulent.

It is a good idea to meet with a bankruptcy attorney to address these questions, among others, to determine if filing for bankruptcy is the wisest step for you in solving your financial issues. The bankruptcy lawyers Memphis, TN offers have years of experience dealing with bankruptcies and are available to advise you.



Thank you to our friends and contributors at Darrell Castle & Associates, PLLC for their insight into bankruptcy and when you need to disclose it.