It's no secret that your credit rating can come up in your job search. Experts say that 60% of employers check credit before making job offers, and 25% say that a bankruptcy or other severe credit event can keep you from getting a job with them. So those who walk away from mortgages or strategically default would be wise to keep that in mind if they plan on getting a new job in the next few years.

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But what about the job you already have? Can you lose it if someone finds out about a foreclosure? What about a bankruptcy? Officially, you can't be fired for declaring bankruptcy. The US Bankruptcy Code section 525 prevents companies from firing or otherwise discriminating against an employed individual due solely to personal bankruptcy. So, the protection that you are hoping to receive from your creditors by filing for bankruptcy is extended to protection from your employer against being fired or otherwise disciplined or terminated at work because you took steps to correct a bad financial situation.

On the other hand, many of us work in what are called "at will" employment states. That means that you can be fired any time for any or no reason. Just not a protected reason, like your race or age or bankruptcy filing. However, as long as no reason is given, you have little recourse. And bankruptcies and foreclosures are a matter of public record, so your boss can find out.

Recently, in the wake of the recession, states have taken steps to curtail this practice. Oregon Legislature recently outlawed credit checks for hiring, firing, promoting, or determining compensation for most workers. Exceptions were made for financial institutions, public-safety offices, and other jobs where credit history is relevant to performance and a background check is disclosed to the applicant or employee.

Washington State and Hawaii already have curbed widespread use of credit checks in making hiring decisions. Other states are considering similar laws, and a bill, HR 3149, has been introduced that would ban employment-related credit checks nationwide except when the job:

  • Requires a national-security or Federal Deposit Insurance Corp. clearance.
  • Is with a state or local government agency that otherwise requires the use of a credit report.
  • Is for a supervisory, managerial, professional, or executive position at a financial institution.

Right now, would a foreclosure cost you your job? It shouldn't, but it could.