In short – No. Pursuant to federal law, no employer (either federal or private) “may terminate the employment of, or discriminate with respect to employment against, an individual who”:
- Has filed bankruptcy
- Has been insolvent before a case has been discharged
- Has not paid a debt that is dischargeable, or the debt was discharged
Interesting enough, this protection extends to non-filing individuals that are associated with the debt (like a spouse on a joint debt).
Bankruptcy protection for your employment is based in solid reasoning and advances a common good for all. Bankruptcy protects you from a creditor’s collection efforts; therefore, it only makes sense that it should protect you from discriminatory treatment by a creditor when that creditor is your employer. An employer may not discriminate against you for filing bankruptcy if you were going to advance or get a promotion and not give you that promotion due to your filing bankruptcy. In addition, an employer may not demote you for filing bankruptcy.
Now, the protection is a bit tricky when it comes to applying for a new job. Government employers may not discriminate nor refuse to hire you because you filed bankruptcy. In fact, to get a government job or gain a promotion, you may be required to file bankruptcy. For example, a former client had to file bankruptcy to get a promotion that would gain her Top-Secret clearance. The rationale is that she would not be susceptible to bribes or coercion for access to the Top-Secret information in return for money for her debts. On the other hand, there is no protection for gaining employment with a private employer. A private employer can deny you employment based upon your bankruptcy filing.
In short, bankruptcy laws are designed to protect a debtor achieve a fresh start. When you reach that point where the debt gets too overwhelming and you want freedom from your debt, bankruptcy affords you that opportunity. In addition to discharging your debt, bankruptcy law allows you the chance to start over. Starting over is not starting over with nothing as you can keep most property that you need to reorganize. In addition, you can keep your job and continue earning an income after the bankruptcy is completed.
by Jeff Bursell