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Can I lose my job because I filed a bankruptcy case?

Congress inserted a provision in the bankruptcy code preventing the loss of a job because of a bankruptcy filing. The reasoning appears to be based on a belief that the intended fresh start provided by bankruptcy, wouldn’t be complete without job security.

The current version of the code section can be found at 11 U.S.C. sec. 525(b) and partially reads as follows:

“No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt.”

The weak spot for employees, especially in “at will” employment states like Az. is that the employer can fire for other reasons including those related to a person’s financial history.

If an employee were to sue an employer for a violation of this code section post-bankruptcy, he or she would have to prove that the bankruptcy was the sole reason for the firing.

If you think you need to file for bankruptcy, but are concerned about this issue, not only do you need to keep good employment records but you also need to have an experienced attorney help you weigh out all the pros of filing vs all the negative potential consequences including job loss. The choice to file will ultimately be your own.