BANKRUPTCY ATTORNEY QUESTION FROM BRANDON, FLORIDA
Igor B of Brandon, Florida asks: “will filing Bankruptcy affect either my present or future employment?”
Bankruptcy Code Section 525(a) or as it is properly known, 11 USC 525(a) states that no Governmental Unit may deny, revoke, suspend or refuse to renew a license, permit, franchise, or deny employment to, terminate the employment of or discriminate with respect to the employment of a Debtor who has filed Bankruptcy. Bankruptcy Code Section 525(b) states that no Private Employer may terminate the employment of, or discriminate with respect to the employment against, a Debtor who has filed Bankruptcy. Bankruptcy Code Section 525(c)(1) states that no Governmental Unit may deny a Student Grant, Student Loan, Loan Guarantee, or Loan Insurance to a Person that has filed Bankruptcy.
Generally, in terms of Employment, Bankruptcy Code Section 525 holds that an Employer cannot fire, terminate, demote, or reduce the Salary of a Debtor who has filed Bankruptcy.
However, an Employer may take into account other reasons for terminating or otherwise discriminating against an Employee or Applicant who has filed Bankruptcy. There may be other valid reasons for such Actions, such as determinations by the Employer regarding either the Competence, Dishonesty or Tardiness of the Employee. In addition, most States do not prohibit an Employer from conducting Pre-Employment Credit Checks, provided the prospective Employee grants his or her Consent.
In addition, in some District including the Middle District of Florida, a Private Employer may not hire a prospective Employee, or Promote such Employee, because he or she filed Bankruptcy. However, the Private Employer may not Terminate such Employee because he or she filed Bankruptcy. See Myers v Too Jays Management Corp (640 F 3d 1278, 11th Circuit, 2011). This does not apply to Public Employers.
In the twenty or more years that I have practiced Bankruptcy Law, in the representation of many thousands of Clients, I do not know of a single incident where a Client faced termination or denial of employment because he or she filed Bankruptcy. I do know of a number of instances where a Client was instructed by an Employer that he or she needed to file Bankruptcy and relieve themselves of Debt in order to secure Employment.
Some Employers look more favorably upon a Debtor who has filed Bankruptcy because that Person is a lessened risk of theft. Persons who have Security Clearance, such as Persons in the FBI or Armed Forces, who have filed Bankruptcy may have lessened risk of Blackmail.
If you feel that you have been discriminated against because you filed Bankruptcy, you may contact either the EEOC or the US Federal Trade Commission Consumer Response Center.
Thank you Igor of Brandon, Florida for your excellent question. Here is a Video which explains more.