If you’re trying to rent a home or are applying for a job, you may want to know, does bankruptcy show up in background checks? These types of checks are increasingly common and have started an entire background check industry. Depending on the reporting agency, if you’ve filed for bankruptcy protection in the past, there’s a good chance your bankruptcy filing will show up on the report. What will be done with that information depends on the person or business seeking the information.
Will I Pass a Background Check with a Bankruptcy?
Bankruptcy cases are filed in special federal courts, so they’re a matter of public record. If the party’s interested in whether you’re actively suing others or have been sued, they will probably pay a company to do a background check that provides that information. They can also do a search of the federal court system themselves through the Public Access to Court Electronic Records (PACER) system if they know how to use it, pay its fees, and spend the time searching it.
How long your bankruptcy filing will stay on a credit report, which is frequently part of a background check, depends on which chapter of the bankruptcy code you used:
- Chapter 13 bankruptcy is removed from the report seven years from the filing date.
- Chapter 7 bankruptcy is removed from the report ten years after the filing date.
This should happen automatically, according to Experian (which sells credit reports), but if your bankruptcy was filed at least seven years ago, you should get a free credit report to make sure that information’s no longer reported. You can get a free report each year so you can look for and try to remove false or outdated information.
Can a Bankruptcy on My Background Check Hurt My Ability to Get a Job?
Depending on the type of job you are applying for, an employer could use your bankruptcy filing as relevant information on your application. Most employers use this information as just one factor in hiring decisions. If someone hiring runs a background check and discovers a past bankruptcy filing, what can they legally do with that information? The Federal Trade Commission (FTC) enforces the Fair Credit Reporting Act (FCRA). It’s not illegal to gather financial information on job candidates, but which decisions are made based on that information may be illegal under FCRA, depending on the circumstances.
If the employer is a government agency, it can’t refuse to hire you or fire you if you work there based on a bankruptcy filing. If a private employer is involved, the fact that you declared bankruptcy can be a reason not to hire you, but not to fire you if you’re a current employee.
The FCRA requires employers to do the following before it compiles financial information on job applicants:
- You must be informed in writing that they might use the information for decisions about your employment.
- This notice must be separate from the job application.
- The applicant must give written permission to do the background check. If you refuse, they can decide not to hire you.
If the employer decides not to hire you based on background information it obtained through a company that provides background checks, under FCRA, it must first give you:
- A notice including a copy of the report it relied upon to make the decision
- A copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”
Ideally, you should be given a chance to review the report and explain any negative information, like a bankruptcy, to try to save this job opportunity, but it’s not required. The employer must tell you:
- You weren’t hired because of the report’s information
- The name, address, and telephone number of the company selling the report
- The employer, not that company, made the hiring decision
- You have a right to dispute the report’s contents and get an additional free report from the reporting company in 60 days.
If an employer screens candidates by this method, it must do so uniformly. It would be illegal employment discrimination to do so with candidates based on their sex, race, color, religion, or because they’re disabled.
Can a Bankruptcy on My Background Check Hurt My Ability to Rent a Home?
A Past Bankruptcy May or May Not Concern a Landlord
If you want to rent a home, a landlord could use bankruptcy information when deciding whether to rent to you or not. The more recent the filing, the more reluctant the landlord might be. If the filing was two or more years ago, your financial record is good, and you do not have a significant eviction history, it may not matter.
When you discuss renting with the landlord and they mention a background or credit check, it may be best to bring up your bankruptcy, so it won’t be a surprise. If you can show things to demonstrate that you’ll pay rent, it may overcome having a bankruptcy on your record.
A sensible landlord will be more concerned about your income and ability to pay rent, regardless of a bankruptcy you had in the past. A bankruptcy may help you afford the rent payments, because it will relieve you of many other debts or obligations. If you can show you’ve paid rent when you’ve had financial trouble in the past, the landlord may be more open-minded because you’ve made it a priority.
If this becomes an issue you could:
- Find a landlord less concerned about your credit history
- Offer a larger security deposit if you can afford it
- Provide references
- Find someone willing to co-sign for the rent obligation.
Should a Potential Background Check Deter You From Filing for Bankruptcy?
If you’re in severe financial trouble and bankruptcy is your best option, the fact that it might be harder to find a job or it could be more difficult to find a rental home in the future shouldn’t prevent you from filing.
If you do file for bankruptcy, it’s because you need to do so. Bankruptcy filings are generally only one factor when employers or landlords are reviewing a candidate’s application. Being in a stronger financial position and having financial freedom will generally outweigh the potential consequences of filing.
Contact Us and Get Help
The seasoned and compassionate Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer offer a free consultation to help you evaluate your financial situation and give you options about what you should do next. We will discuss the necessary steps for your situation that will lead to a brighter future.
Delaying may worsen your situation, so call Fesenmyer Cousino Weinzimmer today! Call us today to schedule your free consultation at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).