Can I Get a Job, Housing, and Benefits if I File for Chapter 7 Bankruptcy?

Key Takeaways

• Filing Chapter 7 bankruptcy usually doesn’t affect your current job. You can’t be fired just for filing, and most employers won’t even find out unless you owe them money or they’re handling a wage garnishment.

• Bankruptcy generally won’t prevent you from getting a job, especially with government employers. Some private employers may factor in your credit history, but many don’t.

• You can’t be evicted just for filing bankruptcy. If you’re current on rent, your housing is usually safe. If you’re behind, bankruptcy may offer some short-term protection from eviction.

• It may be harder to rent a new apartment right after bankruptcy. Landlords often check credit history, and some may deny applicants with recent bankruptcies. But your chances improve over time, especially if you rebuild your credit and provide strong references.

• Bankruptcy doesn’t disqualify you from Section 8 housing or other public assistance programs. Most federal and state benefits are protected during and after bankruptcy.

• You can still buy a home after bankruptcy. You may need to wait 1–4 years depending on the type of mortgage, but many people become homeowners again after rebuilding their credit.

Will Filing Bankruptcy Impact My Job or Employment Opportunities?

It’s normal to be concerned about how bankruptcy will or won’t affect your current job or job opportunities in the future. Here are some of the most common questions people have.

Can I Lose My Job for Filing Bankruptcy? 

No.

Yes, it’s really that simple. The Bankruptcy Code specifically says that neither a government employer nor a private employer can fire you for filing bankruptcy. In fact, the protection is even broader. The law says you can’t be fired for

• Filing bankruptcy 

• Being insolvent (having more debt than assets) before filing a bankruptcy case or during the case

or

• Not paying a debt that was discharged in bankruptcy or is dischargeable in a pending bankruptcy case.

Will My Employer Know I Filed Bankruptcy? 

It depends. There are two reasons your employer might get official notice of your bankruptcy:

1. If you owe your employer money, they’ll have to be listed in your bankruptcy filing and they’ll get a notice.

2. If another creditor is garnishing your wages, your employer will receive an order telling them to stop withholding money for the creditor.

Outside these two situations, it’s unlikely that your employer will learn about your bankruptcy unless you choose to tell them.

If you’re required to appear in bankruptcy court during your normal work hours, it could be helpful if you explained your situation to your employer, but it’s up to you to decide.

An employer can’t fire you because they found out you filed for bankruptcy.

Is It Harder To Get a Job During or After Bankruptcy?

Different jobs have different eligibility rules.

Government Employers

For example, in most cases, a government employer can’t deny you a job or discriminate against you simply because you filed bankruptcy.

But if the job you’re applying for requires a security clearance and you’re denied because of your credit history, they can choose not to hire you because you didn’t meet the job requirements. 

Private Employers

Private employers have more flexibility. While the Bankruptcy Code offers blanket protection from job loss, it can’t force a private employer to hire you if they think you’re unsuitable.

That said, many employers don't care if you have a bankruptcy in your credit history and many of them won’t ask about it at all. Some employers may not even check your credit report.

In fact, some state laws limit the use of credit reports in hiring decisions.

Does Filing Bankruptcy Impact My Housing?

Another major area of concern for potential bankruptcy filers is housing. Here are some FAQs.

Can I Be Evicted Because of Bankruptcy?

Generally, no. If you’ve been paying your rent on time and continue to do so, you can’t be evicted solely for filing bankruptcy. 

If you’re behind on your rent, things get a little more complicated. Filing bankruptcy can protect you from being evicted because of the automatic stay protection. This stops all collection actions and requires the landlord to wait for the bankruptcy case to be settled before collecting debt through the bankruptcy court.

If missed rent payments are a part of your bankruptcy case, it might be a good idea to consult with a bankruptcy attorney to ensure that you’re working with the most current information on local eviction laws and protections.

Can I Be Denied an Apartment Because of Bankruptcy?

Nothing in federal law prevents a landlord from choosing not to rent to you because you filed bankruptcy. In fact, credit histories play an important role in most rental decisions.

Some property managers pull your credit report directly, while others rely on rental screening services. 

Standards vary from landlord to landlord. Some will automatically reject anyone with a recent bankruptcy. Others will factor in things like 

• How long it’s been since you filed bankruptcy

• Your credit score

• Your previous rental history

• Your current income

• How long you’ve been at your job

• Your payment history post-bankruptcy

Some smaller companies or individuals who own rental property may even make case-by-case decisions after talking with you and looking at other factors. 

Can I Get Section 8 Housing Assistance After Bankruptcy? 

Yes. Bankruptcy doesn’t impact Section 8 eligibility.

However, landlords who accept Section 8 may still have their own criteria, so a Section 8 applicant who has filed for bankruptcy may have more limited options.

It’s important to remember that landlords also consider other aspects of your credit history. If you’re deep in debt and have a lot of late payments, this could affect your ability to find housing as much as having a bankruptcy on your credit report would, if not more.

Tips for Finding an Apartment or Rental Home after Bankruptcy

In most situations involving financial risk to the other party, your options get better as your bankruptcy filing gets older.

If you rebuild your credit after bankruptcy, most creditors, landlords, and others will pay more attention to your recent history and less to your bankruptcy.

So, if you can stay in your current apartment or home for a year or two after bankruptcy, you’ll likely have more choices. 

Of course, that’s not always possible. If you must move shortly after bankruptcy follow these tips: 

• Don’t lie. You may think hiding your bankruptcy is the safest route, but chances are good the landlord will find out. A landlord is much less likely to take a chance on you if you’ve already lied to them. 

• Point to your recent credit history. Your credit score alone may not tell the whole story. If you’ve been paying your bills on time since the bankruptcy, point that out. If necessary, get a copy of your credit report to show the landlord your recent history.

• Offer references. Some landlords ask for references from previous landlords or property managers, but many do not. If you haven’t been asked but you have a good history, offer them anyway. 

• Offer extra security. Landlords are often hesitant to rent to someone who has filed bankruptcy because they’re worried about getting paid. If you can, offer a larger security deposit, prepayment of the last month’s rent, or even a co-signer.

Can I Buy a House After Bankruptcy? 

In short, yes. But becoming a homeowner may take time. Mortgage lenders extend a significant amount of credit, and will want to be sure they’ll be repaid.

You may be denied a mortgage at first, but as you build back your good credit, that obstacle won’t last long. 

Typically, government-backed loan insurance programs, such as those offered by the VA and the Federal Housing Administration (FHA), will help you qualify for a mortgage loan two years after Chapter 7.

In certain circumstances, this may be reduced to just one year. With a conventional lender, it’s usually four years. 

How Does Filing Bankruptcy Impact My Government Benefits?

Most government benefits aren’t affected by bankruptcy. These typically fall into two categories: 

1. Benefits earned through work or contributions

2. Benefits offered by the federal, state, or local government to assist people who don’t have sufficient resources to provide for themselves and their families 

Earned Benefits and Bankruptcy

Some of the most common examples of earned benefits are Social Security, Social Security Disability, and Medicare.

These benefits are all based on your work history. While you’re working, you contribute to these programs through your payroll taxes.

If you’re eligible based on age, disability, and work history, you can’t be denied due to credit problems or bankruptcy. 

Unemployment Benefits and Bankruptcy

Unemployment benefits are earned benefits that work differently, but the end result is the same.

Depending on your state, your employer either pays unemployment insurance premiums or makes contributions to the state unemployment program.

Benefits may be denied if you quit your job, are fired for cause, or don’t have enough work history. If you’re otherwise eligible, though, bankruptcy won’t stand in your way. 

Public Assistance Benefits

Public assistance benefits are benefits you haven’t earned or paid for. Instead, they’re offered by the government to help keep people out of poverty.

Some common examples of these benefits include:

• Medicaid

• WIC vouchers

• Cash benefits

• Rent assistance

• SNAP benefits

These benefits are intended to help people who are struggling financially, so it makes sense that they’re not affected by bankruptcy.

Are Government Benefits Safe in Bankruptcy?

If you rely on government benefits, you might worry that filing for bankruptcy could put them at risk. But in most cases, these benefits are protected — both from creditors and from the bankruptcy trustee.

Social Security, disability, unemployment, veterans benefits, and most public assistance programs like SNAP and Medicaid are protected under federal law. This means creditors usually can’t take them, and the bankruptcy court typically won’t require you to use them to pay off debts.

Each state also has its own set of rules — called exemptions — that may protect additional benefits or offer different options. Some states let you choose between state and federal exemptions, while others require you to use the state system.