Bankruptcy will affect many areas of the filer’s life, but many times, the fear of whether a bankruptcy case will adversely affect a person’s current or future employment will prevent him or her from pursuing a bankruptcy case. Filing for bankruptcy is not an easy decision and many people fear a social stigma after they file. The truth is the stigma against people who file for bankruptcy has greatly decreased over the last 20 years, and there is no indication that debtors will be treated less favorably after filing for bankruptcy. In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “clean slate.”
Can an Employer Fire Someone Due to Bankruptcy?
An employer cannot fire someone solely because he or she filed for bankruptcy. An employer can also not use a bankruptcy filing as a reason to change someone’s terms or conditions of employment. This means that the employer cannot reduce an employee’s salary, demote him or her, or take away job responsibilities because the employee filed for bankruptcy.
If an employer fires an employee soon after learning about the employee’s bankruptcy filing and no other reasons exist for the discharge, the employee may have a case against the employer for illegal discrimination.
Bankruptcy Filings Are Public Record.
All bankruptcy filings are public records with the exception of certain sensitive information, including the filer’s Social Security numbers, account numbers, and minor children’s names and dates of birth. The rest of the information involved in a bankruptcy case can be easily found online through the bankruptcy Pacer system. The fact this information is public, however, does not mean that the person’s employer will check the bankruptcy filing’s status. The Pacer system is not necessarily user friendly and can be complicated to navigate.
Will the Bankruptcy Trustee Contact the Filer’s Employer?
The filer is not required to tell his or her employer about his or her bankruptcy case. They certainly will not discover this information from the bankruptcy trustee since trustees do not routinely talk with the filer’s employer.
While it is true that employers rarely find out about an employee’s bankruptcy filing, it can happen. If the filer is proceeding with a Chapter 13 bankruptcy, and part of the person’s Chapter 13 repayment plan requires payments to be taken out of the person’s wages, the employer may find out about the bankruptcy filing this way. Additionally, if the filer owes the employer money, this debt will be listed on the filer’s initial bankruptcy paperwork, and the employer will be notified of the fact that a bankruptcy case has been initiated.
Certain jobs also require security clearance, including jobs working for the armed forces, the FBI, or another governmental agency. A background check will reveal a bankruptcy case in this situation. However, no federal, state, or local government agency can consider a bankruptcy case when deciding to hire someone. This is not to say that private employers cannot consider a bankruptcy case when hiring an applicant. Bankruptcy cases in a person’s background can become a problem when the person is applying for a job in the private financial sector, including the accounting or bookkeeping industry. The potential employer does need the applicant’s permission before running a background check, but if the applicant refuses to comply, this can prevent the person being hired.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Related Resources:
Debunking The Biggest Bankruptcy Myths: https://timothykingcade.com/2022/09/09/debunking-the-biggest-bankruptcy-myths/