Will Filing Bankruptcy Affect Your Employment?

Filing bankruptcy will impact many areas of your life including your credit score and your future finances. As people consider how their life may change after filing bankruptcy, it is not uncommon for them to wonder if filing bankruptcy will affect their current employment. Fortunately, if you have debts you cannot afford to pay and are thinking about bankruptcy, the good news is that filing should not affect your job. Below, our Orlando bankruptcy lawyer explains more.

Will Your Employer Learn of Your Bankruptcy?

Of course, before your employer can take action against you based on a bankruptcy filing, they must first find out about it. Whether your employer will know that you have filed bankruptcy largely depends on the type of bankruptcy you file, and how payments are structured.

Chapter 7 bankruptcies are court proceedings, meaning that they are on the public record. During this type of bankruptcy, you must provide a list of creditors who are then notified about your bankruptcy proceeding. The notice is necessary so creditors can challenge a discharge of the debt owed to them. You do not need to list your employer unless you owe a debt to them. Additionally, while Chapter 7 proceedings do become public record, most employers do not take the time, or have the know-how, to look up this information on their current employees.

Chapter 13 bankruptcies are still court proceedings, but they differ vastly from Chapter 7 cases. Instead of having debt discharged, it is restructured into a payment plan. Sometimes, a judge will order the payments to be garnished from a borrower’s paycheck. In these cases, your employer will learn of the bankruptcy because they have to deduct the amount ordered.

Discrimination Under the Bankruptcy Code

Section 525 of the United States Code governs bankruptcy proceedings throughout the country. Under this section of law, it is illegal for employers to discriminate against workers based on the fact that they have filed for bankruptcy. While the legislation clearly makes this type of discrimination illegal, it does not mean that all employers comply with the law. Sometimes employers break the law and when they do, it is not always easy to prove.

When an employer fires, demotes, or takes other adverse action against an employee based on the fact that they filed bankruptcy, they will usually give another reason for the termination. This can make it difficult to prove that the employer’s actions were in fact, discriminatory under the law.

While proving bankruptcy discrimination in your place of employment may present certain challenges, that does not mean it cannot be done. For example, if the employer had previously terminated employees after they had filed bankruptcy, that can show that they fired you for the same reason.

Our Bankruptcy Lawyer in Orlando Can Prove Your Case

If you are considering bankruptcy and are concerned about whether it will affect your job, or your employer has already taken action against you, it is important to speak to an Orlando bankruptcy lawyer. At Anderson & Ferrin, P.A., we can advise you of your legal options, help you navigate the bankruptcy process, and give you the best chance of a positive outcome in all aspects of your case. Call us now at 407-412-7041 or contact us online to schedule a free consultation.

Sources:

law.cornell.edu/uscode/text/11/525

law.cornell.edu/uscode/text/11/chapter-7