There are a variety of reasons why someone’s record of a bankruptcy filing could affect their credit or trustworthiness. Job applications in the financial sector routinely require credit and background checks as safeguards when handling client money. Those are who financially responsible tend to understand the value of providing financial services and may be more desirable candidates for employment.
In rental situations, bankruptcies can be indicators of major risks a landlord is taking. For a smaller landlord, such a risk can turn into a complicated and expensive legal battle.
If you’re concerned with someone’s history of bankruptcy, you can quickly check publicly available records using these three steps.
Step One: Learn More About the Debtor
Without proper information on the debtor, you may get bad results or no results at all. You can begin with a simple search of the person’s name to verify basic information. Facebook is great for verifying someone’s identity, and can often provide important information like current address with a bit of digging.
That’s often enough to go on, but there are ways to get more information as needed. Rental contracts have background checks written into them frequently, alongside credit checks, and those disclosures typically allow you to collect the information you need.
Step Two: Run a Background Check
A background check will provide you the widest amount of information on someone, indicating other financial problems or potential crimes that may be relevant to your interests. For example, a financial services employer may find nothing under a simple bankruptcy search, but a background check would reveal a long chain of theft in various states associated with this individual.
It’s better to get comprehensive and up-to-date information, especially when you’re attempting to hire. Background checks also offer instant service, providing more relevant data from around the United States.
Step Three: Check for Liens
If possible, run a check specifically for liens. This kind of check may be a part of a routine background check, or it could be among other options to choose from. Either way, it is worth the cost. Liens can seriously affect a person’s ability to pay back a loan, as they may prioritize an existing lien over a new loan.
A lien can be viewed the same as a loan, as long as someone is current. If someone falls behind, a lien has serious consequences including property seizure. Tax liens can also have some payroll consequences if wages have been garnished.
Finding More Information
A background check reviews primary sources for results, but sometimes it is helpful to go to the courthouse and review certain documents. You can ask for references from someone to help verify certain aspects of credit history at the time of the application as well.
Letters of recommendation from other financial institutions aren’t common and can be a sign someone is trying to act in good faith. Just remember to balance your benevolence with a sense of apprehension.