Will Filing Bankruptcy Affect Your Employment?

A common question asked by our clients who are contemplating filing bankruptcy is whether or not doing so will affect their employment. That is an understandable question considering they are already struggling financially and do not want to risk losing their job. When asked this question, we assure our clients that federal law protects them from being let go from and otherwise penalized on their job solely because they filed bankruptcy. According to 11 U.S. Code § 525, neither a government or private employer “may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt.” So, it is clear that your employer may not fire you or discriminate against you in any way just because you filed bankruptcy.

Most clients are satisfied that they are protected from discrimination by the employer, but some question whether or not their employer even has to know about them filing bankruptcy. There is no law that says you directly have to inform your employer that you have filed bankruptcy. However, it is possible that your employer may find out in some other way. The most likely way your employer could find out is if you file Chapter 13 bankruptcy and have your bankruptcy payments deducted from your check. Another way your employer may learn is if they receive notification to stop a current garnishment of your wages because you have filed bankruptcy.

So, if you are contemplating filing bankruptcy do not let the fear of losing your job stop you. There are protections in place to make sure that is not at issue. If you have more questions or would like to start the process of filing bankruptcy, contact us today for a free consultation.