Bankruptcy is designed to help you get through severe financial problems, and the law is designed to help you get back on your feet and move forward in life. It’s important to know that filing for bankruptcy doesn’t give your employer a valid reason to terminate your employment, reduce your salary, or change your job responsibilities. The bankruptcy laws specifically prohibit this type of discrimination, and this applies to all employees, regardless of whether they work for the federal government, state government, or a private company.
Usually, your employer will not even find out about your bankruptcy filing, because you are not required by federal law to disclose it. A bankruptcy will stop most garnishments (not child support garnishments) but your employer will almost certainly become aware of the bankruptcy as part of terminating the garnishment. Even if your employer does become aware of your filing, they are not allowed to discriminate against you. It’s worth noting that some employers may review credit reports during the hiring process. While a bankruptcy filing cannot be used to retaliate against job applicants, it may limit your ability to work in certain roles, such as payroll, accounting, or with business funds.
If your job requires a security clearance, your bankruptcy filing may actually be seen as a positive. Eliminating debts can reduce the risk of liability associated with your position and decrease the likelihood of blackmail. If you’re considering filing for bankruptcy, it’s a good idea to consult with a bankruptcy attorney to fully understand your rights and options.
Additionally, the law prohibits discrimination against you in the context of licensing which means, for example, you will not lose a contractor’s license, real estate broker’s license, or nursing license as a result of filing for bankruptcy.
At the Law Office of Michael Primus, we have helped hundreds of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in northern California and have debt problems, contact us for a free consultation.