LOS ANGELES BANKRUPTCY BLOG
Can my employer fire me for filing bankruptcy?
Jan 17, 2011
No, the Bankruptcy Code prohibits an employer from discriminating against you for filing bankruptcy. 11 U.S.C. § 525(b) provides that "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. . ." This means that you can't be fired from your job simply because you have filed for bankruptcy.
In most cases, your employer will never even know that you have filed for bankruptcy unless you tell them, or unless you owe money to your employer, since all creditors must be listed in your bankruptcy schedules. An employer must have a different, legitimate reason to terminate you, such as being late, not showing up at all, or not properly performing your job duties.
Many employers review credit reports as part of a background check before hiring employees and some before giving employees promotions. A bankruptcy may raise questions about an employee's financial judgment, and may even raise concerns about theft or embezzlement, although it seems obvious that an individual who has filed bankruptcy to discharge his or her debts would be less likely to take such drastic actions than someone who is still being hounded by debt collectors. Even if those concerns are unfounded, you may be asked to explain the facts of your bankruptcy to your employer. However, this usually only applies to employment with companies that deal with financial issues or require the bonding of employees such as banks and other financial institutions. Federal, state, and government agencies can not refuse employment due to bankruptcy.
Unless your state is among the few that now have so-called "credit check laws" that restrict or prohibit it, a potential employer generally has the right to conduct an employment credit check to make a hiring decision about you. A potential employer might check your credit report as part of an employment background check, although this has become more controversial, and legislators in several states have introduced bills to restrict or prohibit this practice.
