If you are overwhelmed by debt, you may be considering bankruptcy. But how will it affect your job? Will your employer find out? Fortunately, employers cannot fire you because you filed for bankruptcy. If you lose your job because you filed for Chapter 7, you may be able to take legal action against your employer.
The law prohibits termination because of bankruptcy
Employers – government and private – are prohibited from terminating employees for filing for bankruptcy. Specifically, under 11 U.S. Code § 525, it is unlawful for any employer to terminate your employment for the following reasons:
- You declared bankruptcy
- You were insolvent before having your debt discharged
- You have not paid a debt that is dischargeable or that was discharged under the Bankruptcy Act.
Additionally, your spouse’s job is protected as the law extends the same safeguards to people associated with the debtor.
How bankruptcy affects job applicants
Government agencies are prohibited from considering your bankruptcy when reviewing your job application. However, private companies have the right to deny your application because of your credit history or bankruptcy filings. Being truthful with prospective employers about past financial hardships is often the best approach when explaining a bankruptcy filing or dip in your credit score.
How employers learn about bankruptcy
In many cases, employers never find out about Chapter 7 filings among their workforce. However, if a creditor takes action against you, and your wages are garnished, your employer may learn that you filed for Chapter 7 when you attempt to stop the garnishments. In some cases, employers learn about Chapter 13 filings because the judge orders an automatic deduction from your wages to pay creditors back.
Debt can affect every aspect of your personal and professional life. The right attorney can stand by your side and help you understand the law. At Thomas M. Denaro, Esq., our Bronx attorneys guide you through each step of the bankruptcy process so can emerge debt free.