Why Do You Need a Bankruptcy Background Check for Employment?

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Financial Hiring Trends Report of 2023

What Exactly is a Bankruptcy?

Bankruptcy is a legal status that results from a court filing by a debtor who is unable to repay debts. It can also be referred to as "insolvency." In general, it has been found that people with a bankruptcy on their record are less likely to be hired because of the stigma associated with such a status. However, there are exceptions to this rule. Some companies require applicants for certain types of jobs to have no bankruptcies on their records over their whole lifetime. Others may consider having one or more bankruptcies in the past 10 years as grounds for not hiring an applicant.

What is a Bankruptcy Check for Employment?

A bankruptcy check is a type of check that can be used to show proof of a person's financial status. It is usually used by employers and other organizations in the context of employment. A bankruptcy check can be requested by employers who are concerned about their employees' financial stability and want to make sure they are not experiencing financial difficulties that could affect their ability to work coherently and conscientiously in the future.

The most common opportunity for running a bankruptcy check is during the job search process. An employer may request one before hiring an applicant, or after a new employee has been hired, as part of the hiring and offer process.

Why do Employers Ask About Bankruptcy When Doing a Background Check for Employment?

Bankruptcy is a risk factor in the job market. It is a form of personal financial crisis that can have long-lasting effects on an individual's future employment prospects. The effects of bankruptcy can range from a loss of income, to the inability to find work, and then to difficulty maintaining relationships with co-workers and supervisors.

There are many reasons why employers ask about bankruptcy when doing a background check for employment purposes. One reason is to screen out those applicants who might be more likely to file for bankruptcy in the future, and those who might have been affected by it in the past. 

Background Checks vs Credit Reports for Employment Screening - Which is Better?

Background checks and credit reports are two of the most popular employment screening options. But which is better for employment screening?

Background checks are more comprehensive than credit reports because they include criminal records, employment history, property ownership information, and other information. Credit reports only contain the credit record of an individual.

The answer to this question depends on what you need to screen for as an employer, and for the particular role to which you are hiring. If you need to conduct a thorough screening for greater accuracy, depth and regulatory compliance, then a background check would be best. But if you just want to know if someone has bad credit or not, then a credit report would be sufficient.

The Different Types of Bankruptcy Checks

Bankruptcy checks are a set of documents that an individual is required to submit to a bankruptcy court in order to request a discharge of debts.

There are two types of bankruptcy checks:

- the first type is submitted by the debtor before they file for bankruptcy, and it includes information about their current income, assets, and liabilities.

- the second type is submitted by the debtor after they have filed for bankruptcy and it includes information about their current income, assets, and liabilities.

Will a Bankruptcy Be Included in a Background Check?

A background check is an important part of the hiring process. In fact, it's a requirement for most employers.

Background checking typically includes credit history, bankruptcies, and other factors that may disqualify an applicant from being hired. However, what happens when an applicant has filed for bankruptcy? It is something that needs to be considered now because the number of people who are filing for bankruptcy increases each year.

A bankruptcy is a significant event in one’s financial history. It can have a long-term effect on the credit score of an individual. Therefore, it is not surprising that background checks for those who are applying for jobs or loans are screened about any bankruptcies.

However, this might be changing soon as more and more companies start to use digital screening software to automate their background check processes. These systems can detect whether an applicant has filed for bankruptcy within the past few years and then flag them accordingly.

Conclusion: Why Do You Need a Bankruptcy Background Check for Employees?

As the economy has grown and more people have been laid off, the need for a bankruptcy background check has increased. Employers are now required to do a bankruptcy background check on potential employees. This is because there is a risk that a potential employee could be filing for bankruptcy to avoid paying their debts. Such a life-impacting event for an individual can cause significant problems in the workplace, and may lead to termination of employment further down the line.

Employers are also required to do a credit report on potential employees before hiring them as well. A credit report will show if there have been any issues with the applicant’s financial situation in the past, which could also lead to termination of employment if they are unable to, or unwilling, to pay their debts.

A bankruptcy background check is an important part of the hiring process because it can help companies avoid hiring a person that may negatively impact their company's finances in the future.


What background check do I need?

This depends on the industry and type of role you are recruiting for. To determine whether you need reference checks, identity checks, bankruptcy checks, civil background checks, credit checks for employment or any of the other background checks we offer, chat to our team of dedicated account managers.

Why should employers check the background of potential employees?

Many industries have compliance-related employment check requirements. And even if your industry doesn’t, remember that your staff have access to assets and data that must be protected. When you employ a new staff member you need to be certain that they have the best interests of your business at heart. Carrying out comprehensive background checking helps mitigate risk and ensures a safer hiring decision.

How long do background checks take?

Again, this depends on the type of checks you need. Simple identity checks can be carried out in as little as a few hours but a worldwide criminal background check for instance might take several weeks. A simple pre-employment check package takes around a week. Our account managers are specialists and can provide detailed information into which checks you need and how long they will take.

Can you do a background check online?

All Veremark checks are carried out online and digitally. This eliminates the need to collect, store and manage paper documents and information making the process faster, more efficient and ensures complete safety of candidate data and documents.

What are the benefits of a background check?

In a competitive marketplace, making the right hiring decisions is key to the success of your company. Employment background checks enables you to understand more about your candidates before making crucial decisions which can have either beneficial or catastrophic effects on your business.

What does a background check show?

Background checks not only provide useful insights into a candidate’s work history, skills and education, but they can also offer richer detail into someone’s personality and character traits. This gives you a huge advantage when considering who to hire. Background checking also ensures that candidates are legally allowed to carry out certain roles, failed criminal and credit checks could prevent them from working with vulnerable people or in a financial function.

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