Not every job role will require financial checks, but understanding the need for a bankruptcy background check in the employment process is important for both employers and those looking for a new job. If you’re not sure what bankruptcy is, why employers conduct bankruptcy checks, and how it fits into the broader landscape of background screening then we’ll try to explain the basics of the system and how it might affect you if you are being asked to go through background screening or a DBS check.
What is Bankruptcy?
Bankruptcy is also known as insolvency. This is a legal status which basically means that you are unable to repay your debts. People might become bankrupt because they suffer a reduction in income after they lose their job, through overspending, or because they simply cannot manage the level of debt on their current income. Bankruptcy is managed through the courts, and if someone is declared bankrupt, they lose control over many financial decisions for a set period.
Bankruptcy Check for Employment
Employers use bankruptcy checks to assess an applicant's financial stability. These checks are commonly used in recruiting for positions which involve dealing with money, both cash and in a digital sense. Certain positions are not legally open to people who are going through the bankruptcy process, so companies are legally obliged to check. Bankruptcy is a public matter, and you cannot keep it a secret if you have been declared bankrupt by the courts.
Why Are Employers Interested in Bankruptcy?
Bankruptcy can pose risks to an individual's employment, affecting income, work performance, and relationships. It is a major life event which can seriously affect someone’s potential to perform in their work. A bankruptcy check is also essential for roles involving handling money or high-value transactions to prevent theft or temptation to commit fraud due to the financial position the person finds themselves in. These checks are all about minimising risk for the employer.
Bankruptcy will be disclosed on a credit check, and this is the usual way of checking someone’s status when applying for a job.
Overseas Bankruptcy Checking
In the UK, there are databases which make it easy to check online whether someone has been declared bankrupt. In other countries, such as the USA, checking is more complex with each state having their own requirements and processes. Bankruptcy may not always mean the same thing in different countries, so legal advice should be taken if recruiting someone into a very senior position.
Advice for People Who Have Been Through Bankruptcy
Once your bankruptcy has been discharged, you get the rights back to manage your finances, although your credit score may still be seriously affected. There are many industries and jobs where bankruptcy will be irrelevant, and you will not be asked to disclose this fact at all. Although employment in a bank or insurance company may be tricky, there are many other industry sectors which may be happy to employ you. Never be tempted to lie about your past though, as it is easy to find out whether anyone has ever been declared bankrupt.
