When Do You Need to Disclose Your Bankruptcy?

Find out when you'll have to tell creditors and others about your bankruptcy.

Bankruptcy filings are a matter of public record that can be searched and accessed by anyone. If you file for bankruptcy relief, it will also remain on your credit report for up to ten years. But in general, you don’t have to disclose your bankruptcy unless specifically required (such as on a credit, employment, or security clearance application). Read on to learn more about when you may need to disclose your bankruptcy filing.

For more information on life after bankruptcy, see our  Life After Bankruptcy  topic area.

How Long Does Bankruptcy Stay on Your Credit Report?

In general, bankruptcy stays on your credit report for ten years after your filing date. However, this is a limit set by the Fair Credit Reporting Act. Individual credit reporting agencies also have their own guidelines and may stop reporting a bankruptcy sooner. For example, a Chapter 13 bankruptcy will generally be removed from your credit report after seven years.

Because your bankruptcy information is reflected on your credit report, anyone who pulls your credit can learn of your filing. This means that even if an employer or credit provider does not directly ask you about prior bankruptcies on your application, it can find out through a credit check.

Military Personnel and Security Clearances

If you want to join the military, you will typically have to disclose prior bankruptcies during the application process. Depending on the specific branch of the military you are applying to, a credit check may also be required. Because each branch of the military has its own rules about financial eligibility, talk to a military recruiter to learn more about whether filing for bankruptcy will affect your eligibility for service.  

If you are in the military, filing for bankruptcy can potentially have a negative impact on your security clearance. Security clearance determinations are usually made on a case by case basis. Whether bankruptcy will affect your security clearance can depend on your reasons for filing, your job performance, your clearance level, and even your interaction with co-workers and superiors. As a result, before filing your case, check with the necessary military personnel or department to make sure bankruptcy will not jeopardize your security clearance or otherwise adversely affect your military career.

Do You Have to Disclose Your Bankruptcy to Your Employer?

In general, you don’t have to tell your current employer that you filed for bankruptcy. However, as discussed, your bankruptcy filing is a public record and your employer can find out about it through a public record search or credit check. Also, if you are in a Chapter 13 bankruptcy and fail to make your monthly plan payments, the court or the  bankruptcy trustee  can send your employer a wage deduction order to withhold the payments directly from your paycheck.

Disclosing Bankruptcy on Credit or Employment Applications

If you are applying for a new job, the application may ask about prior bankruptcies. In addition, a credit check may also be part of a background check required by the employer. If the job application asks you about bankruptcy, be honest and disclose it. If you lie on your employment application, it may be grounds for the employer to terminate or not hire you.

Similarly, if you are applying for new credit, answer any questions relating to prior bankruptcies truthfully. In most cases, your lender will also require a credit check prior to lending you the money. If you intentionally lie on the credit application, it can constitute fraud and lead to potential problems or legal action in the future.

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