Should I preemptively tell a new employer about a recent bankruptcy?

September 12, 2015 4:09 PM

I'm hoping to start a new job soon and the company has extended an offer which I have accepted. However the offer is contingent on the results of a background check which I understand is either in progress or will be performed shortly. The problem is that this background check will show that I filed for a Chapter 7 bankruptcy early this year and received a discharge shortly thereafter. So while I wish I could take this moment to celebrate a great new opportunity, I'm afraid that the offer might be rescinded at any moment due to this new information.

I'm guessing the results of the background check will be sent to the person who will be my manager, and I have this person's contact information even though we haven't really interacted much yet. I've been considering just emailing them to say something like, Hi, thank you for deciding to extend this offer, I'm really looking forward to working with you but there's something that may come up on my background check that I want to give you a heads up about before you're surprised by it.

Has anyone done this or known anyone who's done this? Anyone here been in a similar situation? I'm honestly not sure whether it would be better to just wait and see, or to try to get in front of it in some way. But coming out with this to my future manager seems like it comes with its own set of potential pitfalls. I really, really need this job, and I'm so torn between trying to do something proactively to save it and being afraid to take any action that might jeopardize it. Please tell me about what you would do and the factors that would influence your decision. And if you're an HR person or hiring manager who can talk about this from the other side of the table, your perspective would be especially helpful.

More background:

• This is a large bureaucratic company and the background checks are outsourced to a separate agency. I don't know what happens on the company side with the results, I'm just assuming they eventually make their way to the manager who made the decision to extend an offer and who would want to take this new information into account. The company has made it clear that the job is contingent on the results of the background check.
• My impression of the manager and the others I've dealt with is that they're essentially friendly and compassionate people, but I also get the clear sense that there are some rigid, well-defined policies in place around the hiring process that would overrule anyone's personal preference. I just don't know what if anything those policies say about candidates with bankruptcies on their records.
• This is a private employer as opposed to a government agency, so there's nothing legally preventing them from rescinding a job offer due to the bankruptcy. I haven't been able to find anything in their documentation that indicates how they might feel about this one way or the other; there's the usual information about nondiscrimination and equal opportunity, even a few things about criminal convictions not necessarily being a bar to employment, just nothing about credit or financial history.
• The job responsibilities do not involve handling money in any way. However the responsibilities do include being able to have customers trust me to help with non-financial matters, and some of those customers may be in the financial sector.
• If it matters, the financial difficulties and subsequent bankruptcy were largely due to medical bills and related expenses, at a time when I wasn't working steadily. There didn't seem to be any good options at the time; this felt like the least bad option. I don't know if I would do it again, but I'm not sure I regret it either. I felt, and still feel, an enormous amount of guilt about those debts, but bankruptcy took an overwhelming burden out of my life at a time that I really wasn't equipped to deal with it in any way, and while my credit took a nosedive, my life and health have improved because of it. How much it will haunt me in the next ten years remains to be seen I guess.
• If you're thinking I should have brought this up earlier, yes I agree that maybe that would have been better than this eleventh-hour suspense. It's just that there didn't seem like any appropriate time to discuss anything like this, and now here we are. I never lied or misrepresented myself in any way at any point in the application or interview process; it just never came up. I guess this is just one of those things that nobody asks candidates but everyone is working under the assumption that there are no skeletons in your closet, financial or otherwise.
• The recruiter told me that everyone I met with really liked me and is enthusiastic about bringing me on. And it's a job that I'm really well suited for, it fits right in with my experience and I'm confident I'll be great at it, assuming nothing goes sideways here at the last minute. I don't know if any of this will matter, but if it's a question of weighing the bankruptcy against other factors, this would be on the other side of the scale.

Thank you for any feedback you can offer here. If anyone has offline questions or advice, please contact me at [e-mail].

posted by anonymous to Work & Money (13 answers total)

If the employer already has rules in place regarding what happens in this situation, there's nothing you'll be able to do to alter it, so I think right now you should do nothing. You do not know that your perspective new manager would be given results of the background check (at my employer, they are not, and I'm so glad because I do NOT want to know anything of that nature), so I would strongly urge you not to disclose anything to that person. If you really have to talk to someone, call the HR person and talk to them instead.
posted by ThePinkSuperhero at 4:19 PM on September 12, 2015 [5 favorites]

I would very seriously doubt the hiring manager will see any detail about the background check. There is no reason for the manager to have any detail - a fail is not something the manager can negotiate. As a a manager when a candidate fails background all I get is an email that says "XYZ did not pass the candidate screening." No other details or options to appeal.

I would ride it out - it may come out in background, but not be an issue. It may not come out in background at all.
posted by 26.2 at 4:21 PM on September 12, 2015 [2 favorites]

Some employers don't actually perform a credit check as part of their background investigation. We don't. I do know that they have to have your specific permission to pull a credit report, although public records like bankruptcies don't require it. FWIW, at my shop we wouldn't pay any attention to a bankruptcy and I'd never mention it to an employee. We're primarily focused on criminal stuff and verifying the reported information on your resume. I know that we've had people obtain security clearances with recent bankruptcies.

If I were in your situation, I'd sit back and wait. Have an answer prepared in case they ask you about it, but its likely to be either something they don't care about or something they have an absolute rule about. Nothing you can say in advance will change either of those.
posted by Lame_username at 4:22 PM on September 12, 2015 [5 favorites]

I don't think there's any reason to say anything.

It varies, but "background check" typically means "criminal." It's a very big "if" that they find out about it, and another very big "if" that they care if they do find out. Don't create a problem if no problem exists yet.
posted by drjimmy11 at 4:29 PM on September 12, 2015 [7 favorites]

It depends on the background check. Basic ones only give you criminal records. Thorough ones show issues like bankruptcy as well. If you're not handling money, then they may only be looking at criminal records. Did they say if they would include a credit check?
posted by frumiousb at 4:31 PM on September 12, 2015

Agreed, there's a good chance that they are simply looking for any criminal past you may have. And, as you've mentioned, even if they are looking for bankruptcies, if there's a blanket rule against them, there's a good chance little could be done anyhow (so it would be ideal if they didn't find it somehow and you didn't go out of your way to tell them).

The only thing I could see being an issue is if they asked if you had declared bankruptcy at all, you lied and said no, then they said they were going to look anyhow. Then I'd say you were probably screwed, but should fess up.

But that's not what's happening here. I'd say nothing, and cross your fingers.

Best of luck and congratulations!
posted by Brian Puccio at 4:37 PM on September 12, 2015 [1 favorite]

There is no benefit to you for telling them. If it doesn't come up, then it doesn't come up. If it does come up, they'll understand why you didn't volunteer it.
posted by rhizome at 5:23 PM on September 12, 2015

I encourage you to let go of the guilt and shame over filing for bankruptcy. Bankruptcy is a responsible thing to do when debt outpaces income, especially when it is due to circumstances beyond your control. From the Administrative Office of U.S. Courts:

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start."

As a former legal aid attorney, it's one of my pet peeves to hear people talk about bankruptcy like it's a sin, instead of the benefit for the overall economy that it actually is. I'm a fan of bswinburn's comment on this issue, and I encourage you to review it for additional moral support.
posted by Little Dawn at 5:57 PM on September 12, 2015 [10 favorites]

Don't sweat too much. My big bureaucratic company checks for criminal history, against a list of globally known terrorists/terrorist organizations, and that you are a citizen of the country you say you are. Drug testing happens. Credit check? I don't think it happens as often.
posted by slateyness at 7:57 PM on September 12, 2015

I asked my company what they look for in a background check, and it turns out that for a major retail company, for a position that handles money while alone, has alarm codes, and holds keys to the building, they only ask the background check contracting company to look for crimes that relate to theft, and open warrants for arrest. The company only tells the background check people what they care about, and the background check people only give a "yes" or a "no" but not any details about what caused the "no" if that's the case. I was kind of surprised, because I thought it was a bigger deal, but apparently it's not.

Now the threshold for your particular company may be different than mine was, but in general, a criminal background check will only advise a company of criminal matters. A DUI might be a big deal, and so might a drug conviction, or it might not. A bankruptcy is not a crime, and while it is a court matter, it's still not criminal.

In most states, a background check and a credit check are not the same thing. If they are also credit checking you, they should have given you a specific credit check authorization along with the background check authorization. In some (most?) states, you are entitled to a copy of your background check if one has been run, and seeing it may put your mind at ease or at least give you information on how to proceed. It's also kind of cool to get that kind of information about yourself, and there's a very small chance that you could actually discover and correct any confusion on their part, particularly if you have a very common name.

Generally speaking, if you didn't rob a bank or kill anyone, and you're definitely legal to work in the US, the background check is a formality. They do it to cover their butts in case you turn out to be secretly an international terrorist. (Also, good luck with the bankruptcy. My stepdad did one and it turned his life around, so seriously, good job taking steps to sort out your financials. That's very responsible.)
posted by blnkfrnk at 8:19 PM on September 12, 2015 [1 favorite]

Did you sign any consent forms that explicitly granted the employer permission to check your credit? If not, then they can't pull your credit according to FCRA rules.

If you did, and they do, I would doubt this would be a barrier to your employment unless the job is a position that carries a high risk for monetary crimes like embezzlement, and even then you'd probably have to have a pretty poor credit history for it to be an issue.

20 years ago, I worked such a job - a dealer at a casino. I got into some trouble from previous debt and filed Chapter 13. As soon as it showed up on my credit report, I got called into HR and was asked for an explanation and questioned if 'things were ok for me'. A quick 5 minute conversation later I was back on the floor. Wouldn't surprise me if the smoked glass eyes payed me a little more attention for a while, but it had no further effect on my employment at all. In fact a few months later they offered me the chance to move to the high stakes room.

I wouldn't worry about it at all. As others have stated, even if it was an issue, there's nothing you can do about it. If it was a potential issue they'd probably have asked. As a manager I would never see such information, we don't check credit reports, and I wouldn't care what they said. I would also not see any details of our background checks.

I would absolutely not follow up with such an admission. Enjoy the new job!
posted by SquidLips at 8:37 PM on September 12, 2015

Update from the anonymous OP:

To clarify, the background check authorization I signed specifically mentions credit reports, credit history information, and public records including bankruptcies. Specifically the language in the authorization form says that the background check "may include but is not limited to" those three things among many others. So to be clear, whether or not they end up digging that far, they have requested permission to access those kinds of records and I've granted that permission (not that I had a lot of choice).

posted by LobsterMitten at 9:18 PM on September 12, 2015

And:

My sincere thanks to everyone for their input... I'm not at 100% peace of mind yet but I feel better about the situation and really appreciate the responses.

posted by LobsterMitten at 9:26 PM on September 12, 2015