Can I Lose My Job If I File For Bankruptcy?

For those who are on the edge of their seats, the answer is NO.

The basis for our answer is Section 525 of Title 11 of the United States Code: Protection against discriminatory treatment. According to Section (b),

“No 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 – ”

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;”

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or”

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.”

Filing a Chapter 7 or Chapter 13 bankruptcy may not be a ground for termination under the letter of the law. Some people, perhaps justifiably, might still worry that an employer or prospective employer will still take adverse action. What I often tell people in that situation is imagine two people apply for the same job. The only difference between them is that one filed for bankruptcy and has no debt and the other did not file for bankruptcy and has $25,000 in credit card debt. If the employer is thinking logically, the employer would rightly conclude that the person with no debt will probably be more focused at work and be under less financial burden.

Most employers will run a credit report. So in our example, the employer will see an applicant with a bankruptcy and no credit card debt, or an applicant with $25,000 in credit card debt. From a logical standpoint, filing bankruptcy will actually make for a better employee by removing financial stress and allowing the employee to be more committed to the job.

If you want to know more about the impact of a Chapter 7 or Chapter 13 bankruptcy, our office can help you. Contact Roseville Bankruptcy Attorney Seth Hanson for a FREE bankruptcy consultation today at (916) 780-7005.