How Bankruptcy Might Affect Someone's Employment in Oklahoma: Navigating Chapter 7 and Chapter 13 Filings

When grappling with financial distress, filing for bankruptcy under Chapter 7 or Chapter 13 can offer a lifeline for individuals seeking a fresh start. However, in Oklahoma, where employment is predominantly "at-will," the implications of bankruptcy on one's employment and future job prospects become a significant concern. This nuanced landscape requires a closer look at how bankruptcy, whether it be Chapter 7 or Chapter 13, might influence employment within the state.

Understanding "At-Will" Employment in Oklahoma

Oklahoma's "at-will" employment doctrine allows for the termination of employment by either party for any reason, provided it's not illegal or violates established contracts. While federal laws offer some protections against bankruptcy discrimination, it's crucial to note these protections primarily apply to government jobs. For private sector employees, the impact of filing for bankruptcy on current employment is less straightforward and may vary by employer.

Bankruptcy and Job Security

For current employment, the direct impact of filing for bankruptcy is somewhat mitigated in the private sector. While employers may have the right to terminate employment for any lawful reason under the "at-will" doctrine, its often the case that a current employer will not ever know about a bankruptcy filing. Generally speaking, there is no requirement to notify your employer of your bankruptcy filing. For the vast majority of Chapter 7 filers, there are no employment consequences for filing bankruptcy. If, however, you are employed in a sector or role where regular background checks are conducted or you are responsible for handling others money (i.e. CFO for an Investment Firm), your employment may be terminated as a result of filing for bankruptcy.

In Chapter 13, many debtors are required to use a “wage order” to pay their monthly plan payment. An employer will often learn of the bankruptcy through this notice and may choose to terminate the debtor’s employment. This appears to be a fairly rare occurrence in Oklahoma. So, unless your employer has an express policy on bankruptcies, it is likely that your bankruptcy filing will not affect your current employment.

Future Employment Prospects

The potential effects of bankruptcy on future employment are more pronounced. Employers in Oklahoma can perform credit checks as part of their hiring process, with the applicant's consent. A bankruptcy filing, whether under Chapter 7 (liquidation) or Chapter 13 (reorganization), can impact one's credit report and, by extension, might influence an employer's decision-making, especially in roles that demand financial reliability or involve handling finances.

Chapter 7 vs. Chapter 13: Perception and Reality

The type of bankruptcy filed can also influence employment prospects. Chapter 7 bankruptcy might raise concerns about an individual's financial management skills, as it involves the liquidation of assets to pay off debts. In contrast, Chapter 13 bankruptcy demonstrates an effort to repay creditors over time through a court-approved repayment plan, which some employers might view as a sign of financial responsibility and commitment.

Navigating Employment Concerns Post-Bankruptcy

In Oklahoma's "at-will" employment landscape, navigating post-bankruptcy employment concerns requires a proactive approach. When seeking new opportunities, being transparent about the circumstances that led to bankruptcy and the steps taken towards financial rehabilitation can help mitigate potential employer reservations. This approach is particularly relevant when applying for positions that scrutinize financial history.

Conclusion

The journey through bankruptcy in Oklahoma, under Chapter 7 or Chapter 13, is fraught with complexities, especially concerning employment. While federal protections against bankruptcy discrimination are limited primarily to government employment, understanding your rights and how to navigate potential employment hurdles is crucial. Individuals facing bankruptcy are encouraged to consult with legal professionals to explore their options and prepare for the implications on their employment prospects. Remember, bankruptcy may offer a path to financial recovery, but it's important to consider its broader impacts on your professional life in an "at-will" employment state. Speak to an attorney at Pioneer Bankruptcy for more info.