Can I Be Fired for Filing Bankruptcy?

Even though employment law and bankruptcy law are two separate areas of the law, they often intersect when individuals are concerned about their employment and how a California bankruptcy will affect it. We often hear the question: “Can I be fired for filing bankruptcy?” An employer can only take an employees financial condition into account once hired if there is a direct correlation between personal financial management and work performance, usually in the financial services professions. This is true whether your work for the government or a private company. Furthermore, it is illegal for an employer to discriminate against an employee for filing bankruptcy by lowering their salary or demoting them.

It is unlikely that your current employer will even find out about a Chapter 7 bankruptcy filing unless a creditor has won a legal judgment from the court system and your wages are garnished. In a Chapter 13 bankruptcy case, it is a possibility that your bankruptcy judge will order a wage garnishment for your Chapter 13 bankruptcy payments. This automatic deduction from your paycheck is a way to ensure that you meet your Chapter 13 bankruptcy payment obligations.

If you have been let go from your job shortly after filing your Sacramento bankruptcy, it’s important to discuss this with your bankruptcy attorney who can advise on whether you have been the target of illegal discrimination and possibly refer you to an employment attorney if warranted.

A caveat to this bankruptcy discrimination prevention is that a private company CAN refuse to HIRE you because of a bankruptcy. For this reason, and especially for jobs in the financial sector, companies conduct both a background and credit report check to vet potential new hires. Government agencies on the other hand, are not allowed to take your bankruptcy into consideration when deciding to hire you.

The best steps towards gaining employment after filing bankruptcy are to pay concentrated effort towards increasing your credit score and having any derogatory marks removed. Your bankruptcy attorney may also be able to give you advice on gaining new employment after a bankruptcy based on your unique financial situation.