Can I Get Fired For Filing For Bankruptcy

If you are already struggling financially and are considering filing for bankruptcy then you may also be worried about how it will affect your job. Many people have the impression that your employer will find out right away and fire you, if they know you have filed for bankruptcy. There is a specific provision in the bankruptcy code that deals with whether employers can fire your on the basis that you have filed for bankruptcy.

Section 525 (b) of the bankruptcy code states the following:

(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.

So what does this all mean. Your employer cannot fire you solely on the basis that you have filed for bankruptcy.

Does this mean your employer will not fire your for filing for bankruptcy?

This is where the line gets a little blurred and a bit gray. The bankruptcy code states that your employer cannot fire you "solely" on the basis of filing for bankruptcy. This means that if your employer has any other basis and not just you filing for bankruptcy, then they may be able to fire you. The reason for this area being unclear, is that there is not a lot of case law that has disputed this issue or clarified what an employer can or cannot do based on this section of the bankruptcy code. The term "solely" seems to indicate that if the employers only reason for firing you is your bankruptcy filing then you may have a valid claim against him for improperly terminating you. On the other hand, if the employer has any other basis, in addition to your bankruptcy filing, then firing you may be allowed under the bankruptcy code?

Is it better then that I don't file, if I want to keep my job?

It is uncommon for an employer to fire someone after they have filed for bankruptcy. I have filed hundreds of bankruptcy cases and I have yet to hear of an employer terminating someone after they have filed for bankruptcy.

In addition you have to take into consideration other factors. Employers may be more prone to firing someone because they carry debts that they cannot afford to pay. Why would this cause an employer to fire you?

• Distracting Creditor Calls - If you are not current on your payments then you will start receiving creditor calls requesting payments. These creditor calls a lot of times occur during working hours and can interfere with your work. Continuous calls that your employer becomes aware of can be a cause of concern from your employer
• Wage Garnishment - Employers do not like to have to deal with additional HR issues and having a wage garnishment served on them does not please them. If you failed to make your debt payments then the creditor may obtain a judgment against you and eventually garnish your wages. Your employer will not be pleased with having to do additional work to collect specific wages and send them to the sheriffs office.
• Security Concerns- Depending on your job your employer may have security concerns if you have high debt amounts that you have not paid back. If there is any type of money management or security issues then your employer may be concerned about keeping someone employed who owes a lot of money. They may see you as more likely to steal money or information because you need the money to pay your debts. In fact I have had clients who were pushed by their employers to file for bankruptcy because of their concerns with the employee being around money and the possibility that they may steal because of their debt.
  

What About If Owe Your Employer Money?

You may also be concerned about being fired from your job because you owe your employer money or you have a store credit card with your employer. This area presents a tricky situation. Although your employer is not allowed to fire you on the basis that you have filed for bankruptcy and discharged this debt, your employer may put pressure on you to pay the debt back. There is a possibility that your employer may put pressure on your to pay back a debt that is owed to them and make your work environment unpleasant.

Like any other creditor, employers want to be paid back, and they can exert some pressure to have you pay the debt back. This is especially the case because they may suggest that if you fail to pay the deb back you may be fired, or they may make your work environment so uncomfortable than you may want to quit.

Although the employer cannot fire your solely because you have filed for bankruptcy and discharged their debt, they may look for another reason to fire you if you cause them a loss. Unfortunately there does not appear to be a clear cut answer as to how courts would react or decide on this issue if an employer were to fire your.

Although there is a potential that your employer may find a disguised reason to fire you, it is very uncommon. I have filed hundreds of cases in Southern California and have yet to hear of one instance of this occurring.

From Southern California Law Advocates: Riverside County Bankruptcy Attorney