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Filing for bankruptcy does give a new fresh start and gives immediate debt relief but it comes with a price. If you file for personal bankruptcy it does not affect your current job but in prospects, it might but by only a little specifically in the private sector. But stopping just because of the fear does not work, there are laws protecting you from discrimination, and giving you the opportunities like everybody else.
Will your employer find out about your bankruptcy case?
According to the law, it is not necessary to inform your employer and in most cases, he or she does not even know.
In some cases, the employer is informed to stop your wage garnishment because your debt was discharged or if your chapter 13 monthly repayments are directly cut from your paycheck or in other words automatic wage garnishment.
If your employer is one of your creditors then it is essential to inform him or her as he is a part of the bankruptcy case.
Can you be fired or turned down from a job because of your bankruptcy case?
Your employer cannot fire you just because you filed for bankruptcy. There are laws for employment discrimination to support you.
But for new jobs, if the employer asks for background checks you can neither deny nor can lie, or else they will not even consider you.
Yes, it affects your job prospects if you are looking for new jobs but they will also see other things like skills for the job, your interview, etc.
Discrimination law and bankruptcy.
The federal law prohibits any employer whether it be government or private from discriminating against an employee because he or she filed for bankruptcy.
Government agencies
Section 525 of the Bankruptcy Code says that government agencies are prohibited from:
- Denying employment to,
- Terminating the employment of, or
- Otherwise discriminating with respect to employment
In other words federal, state, or even local government agencies cannot deny a debtor to be hired based on his or her case nor can they fire them.
Private-Sector Employers
Section 525 of the Bankruptcy Code uses slightly different language when it addresses private-sector employers. It says that private-sector employers are prohibited from:
- Terminating the employment of, or
- Otherwise discriminating with respect to employment
Against employees on the basis of being a debtor.
The law of employment is intentional here, it means that the private agencies can refuse to employ a debtor but cannot discriminate against or fire any debtor who has a job there.
What to do if you are being discriminated against?
Though it is against employers from discriminating against debtors it still happens. You will need to show proof that the employer denied you the job or fired you just because you filed for a bankruptcy case but reaching out to a bankruptcy attorney and surely help you.
If you want good legal counsel and if you live near Los Angeles & Dallas, TX, reach the Recovery law group – (888-297-6203).