Employment Discrimination and Bankruptcy

A common question I receive is whether an employer can deny you a job or discriminate against you because of filing bankruptcy.  Bankruptcy Code Section 525(a) provides that a governmental unit "may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discrimate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act."  http://codes.lp.findlaw.com/uscode/11/5/II/525 

The above section protects an individual's rights if they are denied or terminated from employment by the government on the basis of having filed a bankruptcy case.  An individual cannot be discriminated against solely on the basis of being bankrupt even before their case is filed.  A job application also cannot be denied solely on the basis of an individual having filed for bankruptcy.

Bankruptcy Code Section 525(b) provides that "no private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt-(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act; (2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act."  http://codes.lp.findlaw.com/uscode/11/5/II/525 

The above section prevents a private employer from denying a job application or terminating you solely because of filing bankruptcy.  Even if your spouse or family member has filed bankruptcy then the employer cannot terminate you on the basis of your association with a bankruptcy filer.

An individual is eligible for employment discrimination protection if they have filed for bankruptcy, become insolvent (broke) even before filing for bankruptcy, or if they did not pay a dischargeable debt.  The Section 525 protection against discrimination helps to ensure that individuals going through the bankruptcy process are able to retain their jobs to avoid incurring further debts.

In order to take advantage of the protection against discriminatory treatment you must have evidence against your employer.  The debtor must prove that their bankruptcy status is the only reason for termination or for the employer denying a job application.  The debtor must show that they were terminated or denied employment based soley on a bankrupty filing, insolvency, or failure to pay a debt.  Victims of unlawful bankruptcy discrimination may be entitled to compensation for it and possibly for emotional distress.  If you believe you are being discriminated against due to bankruptcy status it is imperative to maintain a record of your performance that could help disprove other potential reasons for termination.

For more information about bankruptcy in Kansas City, please visit The Smalley Law Firm's website at http://www.thesmalleylawfirm.com