Employers are not permitted to take adverse action against their employees who file for bankruptcy.  Debtors are protected by 11 U.S.C. sec. 525(b).  Section A applies to governmental units and Section B applies to private employers.  In all my years of practice, I have never had to bring an action or even threaten to bring an action under Section 525.  Most employers understand the stress their employees are under and are not insensitive to their plight.  More people have filed for bankruptcy than you think.

In fact, if you stop and think about it for a moment, most employers will view your filing bankruptcy as the responsible thing to do.   This is because you will put a stop to all of the at work collection phone calls, the garnishments, and the work interruptions.  You will be dealing with the situation rather than ignoring it and this always makes your employer happy.

The text of 11 U.S.C. sec. 525 is set forth below.

Jay S. Jump

www.jumplawgroup.com

Protection against discriminatory treatment:

(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes,” approved July 12, 1943, 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 discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor 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.

(b) 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.