Will I Lose My Job If I File Personal Bankruptcy?

While filing bankruptcy may relieve you of your debt, it sometimes doesn’t relive you of some of the questions  and anxieties you might be facing upon making the decision to file.  If you are considering a bankruptcy and are wondering about the effect it may have on your job, get some advice from an experienced attorney, and become familiar with your protections under the Bankruptcy Code.

Can you lose your job if you file bankruptcy?  Well, no.  There are bankruptcy laws that prohibit termination and discrimination based on a debtor filing for protection under these laws.  No employer can fire you, reduce your salary, demote you, or take away responsibilities solely because you filed. Will your employer find out about your bankruptcy?  That depends.  It is probably a good idea to keep your financial issues private; be careful about discussing your finances with anyone that cannot be trusted.  You should not feel compelled to tell anyone about your bankruptcy, and it is not appropriate to tell these personal financial matters with co-workers.  If you are apprehensive about people “finding out,” especially your boss, then don’t share your future financial plans. 

When you file chapter 7 bankruptcy or chapter 13 bankruptcy, it is a public record that can be viewed by anyone, but unless your employer is a creditor, or you tell your boss directly, you should not need to worry about it.  Some employers will, however, upon hiring new employees, pull credit reports on new job applicants…so it is possible that if you have a new employer, they may know you have had a bankruptcy. It is always best to let your soon-to-be employer if you have filed bankruptcy or if you are soon considering filing for bankruptcy.  Honesty is always the best path.

In case that isn’t the answer you were looking for, a section of the Bankruptcy Act states that it is unlawful to terminate an employee or to discriminate the hiring of an employee because he or she has filed bankruptcy.   With regard to employment, Section 525 of the Bankruptcy Code addresses and provides employment security stating that “no private employer may terminate the employment of, of discriminate with respect to employment” against a person who has declared bankruptcy. Section 525 protects you , the employee, from possible termination.

What if you work in a bank? What if it is your job to deal with money/debt?  Still, I believe that it is creditors that want to collect from you to invest their time to make your think that filing personal bankruptcy will get you fired -- or never get you hired.  That is simply not the case.  Under normal circumstances, your boss would have no knowledge of your bankruptcy filing.  Again, even though it is public record, they would have to search the court records.  Even if your employer did find out, they would be subjecting themselves to federal penalties if they discharged you for filing bankruptcy. 

If you are considering filing for bankruptcy, you should contact an experienced bankruptcy attorney and find out if filing bankruptcy is the best debt relief option available to you.  Many individuals are in need of debt relief, you are not alone.  Make sure that you have the assistance of a debt relief professional when making decisions about your financial future.  You and your family deserve a "fresh start", make sure that you know your options and have the answers.