Bankruptcy and Employment

Many people that end up seeking financial relief through bankruptcy protection fear that they will be stigmatized after their case is completed. Although a bankruptcy case is a matter of public record, the chances of those around you finding out are slim.

You may have heard of a case in which a person filed bankruptcy to obtain a fresh start. After having his debts discharged he decided to relocate to obtain a better job and prevent himself from ending up in financial trouble again. In the process, his employer requested a credit check. Does the man have to consent to the credit check? Can the employer decide not to hire him based on this previous bankruptcy?

Protection Under The Law

There are numerous laws outside of the realm of bankruptcy that prohibit employers from discriminating against a potential employee based on several factors. However, when it comes to discriminating against a candidate based on a previous bankruptcy, laws get a little fuzzy.

Federal statute states that a governmental employer “may not deny employment to, terminate the employment of or discriminate against any person who has filed for bankruptcy;” whereas, the statue prohibits private sector employers from the “termination of an employee or discrimination against an employee who files or has filed for bankruptcy.” What this means is that a person that has filed bankruptcy is protected when applying for a job and holding a job with a government agency, but is only protected from losing their current job if employed by a private employer.

If any discrimination is suspected, it is the responsibility of the employee to prove that they experienced any wrongful rejection or termination solely due to their bankruptcy status.