What To Do If You Are Discriminated Against
While it is against the law for employers to discriminate against people who file bankruptcy, it unfortunately still happens.
If you believe an employer or potential employer discriminated against you based on your bankruptcy filing, first make sure that the employer didn’t have another acceptable reason for letting you go. It can be difficult to prove that your debtor status was the reason for your firing, especially if you had a history of showing up late or not getting your work done.
It can be equally, if not more, difficult to prove that you were turned down for a government job because of your bankruptcy filing. However, an experienced employment law attorney in your area can examine your case and determine if there is evidence of wrongdoing. If so, you may be able to file a wrongful termination or discrimination claim against your employer.
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Your Employer Cant Treat You Differently After Bankruptcy
Are you in line for a raise or promotion? Does your job require a security clearance or professional license? Filing for bankruptcy wont affect any of that.
Your employer cant legally change the conditions of your employment just because of your bankruptcy filing.; Treating you differently is a violation of the law. You cant be demoted, and your boss cant point to the bankruptcy as grounds for taking away responsibilities or cutting your salary. Except for rare exceptions, your security clearances and professional licenses are also protected.
Filing Bankruptcy In Nj Can Make Getting A Job More Difficult
I get many questions about how bankruptcy will affect a client’s life going forward. Usually it is how it will affect their credit score or sometimes how it might affect security clearance or military service. However, one question that is not usually asked is how it will affect future employment.
Many of my clients retain me because a job loss caused their financial difficulties. They are hoping that they will be able to get a job before the unemployment benefits run out. Unfortunately, recent federal court decisions have shown that a bankruptcy on your credit report can make that goal harder to attain.
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Can My Employer Fire Me For Declaring Bankruptcy Will I Lose My Job
Wednesday, November 4th, 2009
Federal law requires that no private or government employer fire you because you have filed for bankruptcy. If a government or private employer violates federal law against bankruptcy discrimination and fires you anyway, you can sue them in state court;or federal bankruptcy court. Additionally, government employers are prohibited from considering your bankruptcy filing when you apply for a job, although unfortunately, private employers can. If a private employer denies your job application , you probably have little recourse. Fortunately, many employers do not consider credit when making employment decisions, and government employers are prohibited from doing so.
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Circumstances Where An Employer Will Receive Official Notice:
There are three main scenarios when your employer will receive notice that you have filed a bankruptcy case. This will happen if the bankruptcy filing is stopping a wage garnishment; if you owe money to your employer and have to list them as a creditor; or if you are filing a Chapter 13 case which requires a payroll deduction order for plan payments.
Stopping a wage garnishment
You might decide to file a bankruptcy specifically to stop a wage garnishment. A wage garnishment occurs after a creditor has filed a lawsuit against you to collect the money you owe. Most often creditors will receive a judgment against you because you did not respond to the lawsuit. If you do not respond within a certain time period, the judge will enter a default judgment against you. Once a judgment is entered, your creditor can serve it on your payroll department so that they can get money from your paycheck before you even see it. This can result in you not having enough money in your paycheck to keep up with expenses.
When you file a bankruptcy case an automatic stay goes into effect immediately, which freezes certain legal proceedings. Your wage garnishment will stop. Your payroll department has to receive notice of your case in order to do so. It can vary by employer whether others in the company are informed.
If you owe your employer money and have to list them as a creditor
Chapter 13 payroll deduction order
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Security Clearances Bankruptcy And Employment
Many jobs require a security clearance. If you’re a member of the armed forces or an employee of the CIA, FBI, another government agency, or a private company that contracts with the government, you might have a security clearance.
Do you risk losing your security clearance if you file for bankruptcy?
Probably notand the opposite might be true. According to credit counselors for the military and the CIA, a person with financial problemsparticularly someone with a lot of debtis at high risk of being blackmailed. By filing for bankruptcy and getting rid of the debts, you substantially lower that risk. Bankruptcy usually works more in your favor than to your detriment.
Protection Is Limited When You Are Seeking New Employment
The bankruptcy laws also provide some protection for bankruptcy filers when they are being considered for new employment but it does not apply to all employers.
Government Employers May Not Refuse to Hire You
Like the prohibitions against termination and discrimination, a government employer cannot refuse to hire you, or any person associated with you, solely because you have filed for bankruptcy, you had been insolvent before receiving a discharge in bankruptcy, or you have not paid a debt that is dischargeable in your bankruptcy or has been discharged in bankruptcy.
Private Employers May Refuse to Hire You
In contrast, there is no similar restriction for private employers. Private employers do have the right to deny you employment based on your bankruptcy filing.
Many private employers require credit or background checks prior to hiring. Your bankruptcy will likely show up in these reports and a private employer can refuse to hire you because you have filed for bankruptcy, even if that is the only reason they are refusing to hire you.
And you may not be protected during an employment evaluation period. At least one appellate court has permitted a private employer to deny employment after a two-day paid evaluation period, solely because it found that the employee had previously filed for bankruptcy. In that case, the bankruptcy was discovered as a result of a background check authorized by the prospective employee.
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Will My Employer Find Out I Have Filed For Bankruptcy
As a practical matter, in most instances, your current employer will not find out that you have filed for bankruptcy unless you owe your employer money and have to list your employer as a creditor, or your Chapter 13 plan payments are required to be deducted from your paycheck and paid directly to the Chapter 13 trustee by your employer. Not all districts require income deduction orders and, even those that do, are likely to waive the requirement if you request a waiver based on your honest concern that involving your employer would result in adverse employment actions.
Can I Still Be Bonded If I Declare Bankruptcy
If you are an undischarged bankrupt, it might also be hard for you to get bonded. If you handle money for clients as a part of your employment, your job might require what is known as a fidelity bond. Fidelity bonds protect your employer from a loss for their clients as a result of an employees behaviour. Being an undischarged bankrupt can make it difficult to be bonded if this is a job requirement. If you are unable to be bonded, an employer may choose not to hire you for these types of positions.
As an undischarged bankrupt, you can also be prevented from holding certain roles such as a director of an incorporated company, a credit union, a co-operative, or a condo corporation.
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Preferences Or Transfers At Undervalue
A transfer of property can be set aside if, in the three months prior to the date of the initial bankruptcy event, the debtor made a payment to one creditor that favored the creditor over others. .
A disposition of property or provision of service for which no consideration is received by the debtor or the consideration received is less than the fair market value of the consideration by the debtor can be set aside if made in the one year before the initial bankruptcy event. If the creditor is not at arms length from the debtor, the disposition of property can be reviewed by up to 5 years before the initial bankruptcy event if the debtor was insolvent or was rendered insolvent by the transaction or the debtor intended to defraud, defeat or delay a creditor.
If you have reasonable grounds to believe that the bankrupt or someone else is guilty of an offence under the BIA or any other statute, you should contact the LIT in charge of the estate or the OSB.
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The United States has many laws governing the conditions of employment, including at will employment. These laws are designed to protect both employers and employees across the country. One of these laws strictly prohibits an employer from terminating an employee based solely on the fact that the employee has filed for bankruptcy.
While the law does prohibit your employer from firing you just for filing for bankruptcy, there are also at-will laws in place in every state in the United States. These at will employment laws allow an employer to fire someone for any reason or no reason at all, as long as the employer doesnt terminate the employee for an illegal reason.
If you find yourself in this situation and feel that your employment was terminated wrongfully because of your bankruptcy, you should consult a qualified;legal representative;who can assist you in assessing your case and gathering the evidence you will need in a wrongful termination lawsuit against your employer.
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Loss Of Income A Primary Factor
Medical costs can take on many forms beyond the out of pocket costs for medicine and equipment not covered by government insurance or work benefit programs. Other demands on your cash flow might include moving expenses, household upgrades, and retirement home expenses.
The most common medical expense however is the loss of income while you are off work recovering from a medical condition.; Unless your employers health insurance tops up your wages, sick benefits from Employment Insurance will only cover a portion of your salary, and that may cause you to rely on credit to pay your bills to pay for living expenses as well as health costs while you are unable to work.
Almost as common is taking time off work to care for family members.; It is now very common for adult children to become caregivers for aging parents, taking time off work to drive them to doctors appointments and caring for them at home while they convalesce.;; The time off work is costly, but if you are also paying for gas and parking fees to take them to doctors appointments, and then buying medical supplies. Health care costs can quickly add up.
Can I Be Fired For Bankruptcy
Many workers may be left with a sense of uncertainty regarding their employment status if they file for bankruptcy. However, the bankruptcy code does not allow an employer to terminate a persons employment simply because they have filed bankruptcy. If an employee has filed for bankruptcy, but loses their job, there may be other causes for the lay-off.
To discuss your legal options if you are facing bankruptcy and need advice, contact the Birmingham bankruptcy attorneys of , at today.
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How Filing For Bankruptcy Will Affect Your Job Applications
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Bankruptcy And Applying For Jobs
If you are applying for a job with a private employer, you do not have a right to conceal a past bankruptcy from the employer. They may find out about the bankruptcy from your credit report, and businesses hiring for positions that involve handling money may think twice about hiring someone with a bankruptcy on their record. Unfortunately, you do not have much recourse in this situation. You can refuse to let a prospective employer conduct a credit check, but this also will be a red flag that may result in the loss of this opportunity. The best approach is probably to be honest about any concerns that the employer will find and explain the situation from your perspective. Your openness may convince the employer that you would be a trustworthy employee despite your past financial troubles.
If you are applying for a government job at the federal, state, or local level, by contrast, you have protections against discrimination based on a previous bankruptcy. The employer cannot take the bankruptcy into account when deciding whether to hire you.
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Can An Employer Fire Me For Filing Bankruptcy
While there has never been a ruling by the Supreme Court regarding this issue, there are several cases in which District Courts have passed down decisions on the issue of discrimination based on bankruptcy status.
The good news is, you cannot be fired by a public employer based on the fact that you have filed for bankruptcy. In addition, a public employer cannot refuse to hire someone because they have filed for bankruptcy or are in the middle of a pending bankruptcy filing.
When it comes to private employers, however, it can be a totally different question. A private employer may, depending on the state, be permitted to refuse to hire you based on the fact that you have filed for bankruptcy in the past. While Section 525 of the US Bankruptcy Code does prohibit employment discrimination against those who have filed bankruptcy, lawsuits for this sort of discrimination are rarely the subject of lawsuits.
In the case of Rea v. Federated Investors, the US Court of Appeals for the Third Circuit explored the idea of discrimination based on bankruptcy status. Mr. Rea had applied for a job with the Federated Investors, and despite a successful interview, he was informed that he had not been selected for employment due to a bankruptcy seven years prior. Rea filed suit, claiming that he had been discriminated against under Section 525.
If You Use A Company Credit Card
If the statement goes directly to your employer and your employer is responsible for payments, you should be able to keep your company credit card after bankruptcy. However, if youve used the card for personal purchases or are liable for the balance, its more likely your company will be notified and take action.
If youre not sure about liability, talk to your human resources department and your attorney.
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What Happens To My Wages In Bankruptcy
You keep your wages in a bankruptcy. Your Trustee does not seize or control your income directly. However, you are required to submit a monthly income and expense report to your Trustee. This information is used to calculate if you earned enough to go over the government set income limit in a bankruptcy. If you do go over this limit, you will be required to make additional surplus income payments.;
Discrimination Laws And Bankruptcy
As mentioned above, federal law prohibits both government and private-sector employers from discriminating against employees who have filed for bankruptcy protection.
The laws that prohibit discrimination against debtors who have filed bankruptcy are found in the U.S. Bankruptcy Code, which is the federal law that oversees bankruptcy proceedings.
Government Agencies
against potential employees or employees on the basis of being a debtor.
In other words, federal, state, and local government agencies cannot refuse to hire, fire, or otherwise discriminate against people who file for bankruptcy.
Private-Sector Employers
Section 525 of the Bankruptcy Code uses slightly different language when it addresses private-sector employers. It says that private-sector employers are prohibited from:
against employees on the basis of being a debtor.
Notably, the language that prohibits denying debtors employment is not included. Case law has interpreted this omission as intentional, and courts have held that private employers are permitted to deny employment to job applicants who have filed for bankruptcy, but not fire or otherwise discriminate against these individuals.
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