Afraid That Filing Bankruptcy Will Get You Fired From Your Job??? Is There a Bankruptcy Effect on Employment?

Posted by on Oct 10, 2013 in Chapter 11 Bankruptcy Issues, Chapter 13 Bankruptcy Issues, Chapter 7 Bankruptcy Issues | 0 comments

So how does bankruptcy effect Employment status?  11 USC Section 525 gives an explanation of that.  The bankruptcy effect on employment is thus:

Private Employers

525(b) says that no private employer may terminate SOLEY because of a bankruptcy.  So that means bankruptcy can actually be a reason but it cannot be the only reason.   It also says that no private employer may discriminate with respect to employment solely because of BK.

Government Jobs

Under 525(a), the government must similarly abide by the same expectations a private employer has with respect to discriminating or terminating an employee who has filed BK or a potential employee who has filed a BK.

Now if one hasn’t filed BK but let the cat out of the bag?  Perhaps that isn’t covered under 525.  Perhaps an employer can discriminate against those contemplating a BK.   That’s a highly unlikely scenario but it needs to be considered.


In most bankruptcy attorneys’ experience, job discrimination or loss of employment is rare, but it has happened before.   However, always remember an employer cannot do so SOLELY because the debtor is a bankrupt or was a bankruptcy.



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