Discrimination In A Bankruptcy Filing

Filing for bankruptcy can be intimidating for some people, especially for those who fear damage to their reputation. The good news is that a bankruptcy filing is rarely publicized and the risk of anyone finding out about a filing is relatively low. Further, bankruptcy laws strictly prohibit discrimination based on the status of a filing.

Protecting Your Reputation

Bankruptcy is not meant to be a punishment or embarrassment, but a tool for financial help.  Although you may be concerned about your friends, family or employer finding out about your bankruptcy case, the truth is that people generally don’t know unless you tell them. The only reason your employer would find out about your case is if you were previously under a wage garnishment order that was stopped as the result of your filing or if they were to conduct a credit check. It is rare for an employer to conduct a credit check on an established employee.

Further, section 525(b) of the bankruptcy code prohibits employers from discriminating against, or terminating, a current employee based on the bankruptcy. If you were to look for a new job your potential employer may check your credit status as a matter of procedure. However, section 525(a) of the bankruptcy code forbids only a governmental employer from denying employment based upon bankruptcy, but does little to protect applicants under a private employment situation.