Current Employment & Bankruptcy

It is illegal for your employer to fire you solely for filing bankruptcy. It is also illegal for employers to take negative action against employees because of a bankruptcy filing. Typically, this means that a debtor’s current employer cannot do the following: reduce the employee’s salary, demote or take responsibilities away from the employee, change the employee’s title, or otherwise create a hostile work environment. Your employer can still fire or discipline you for actions not related to the bankruptcy after you file.

Note that these protections do not apply until you file for bankruptcy. Telling your employer that you will file in the future is not enough to establish these protections.

You are not required to tell your current employer if you file bankruptcy. There are a few situations where your employer may find out that you have filed bankruptcy, including:

• if your employer looks up public records to check bankruptcy filings (although this is unlikely)
• if your employer is currently garnishing your wages (because your employer will receive notice of the bankruptcy case to stop garnishing wages)
• if you hold a professional license that requires you to report a bankruptcy filing to the licensing board and/or your employer (usually only an issue with jobs in the financial industry)
• if you owe your employer money, typically due to overpayment from your employer (because your employer will be notified of the bankruptcy case as one of your creditors).

Future Employment and Bankruptcy

When you file bankruptcy, it is a publicly available record. This means your future employer can learn about your bankruptcy if they obtain a background check when you apply for a job. Private employers (as opposed to government employers) can choose not to hire you because of a past bankruptcy filing. Many employers will not reject you because of a bankruptcy filing, although it may cause concern for certain jobs involving money handling or finances.

Unlike private sector jobs, you have protections against discrimination based on past bankruptcy filings when applying to government jobs at the federal, state, and local levels. Government employers cannot generally take into account a bankruptcy filing when deciding whether to hire you, though they may decide not to hire you for unrelated reasons.

Licenses / Permits & Bankruptcy

A government agency cannot take adverse action against you solely because you filed bankruptcy when you apply for (or already have) a license, permit, franchise, or other similar grant. This means they cannot deny, revoke, suspend, refuse to renew, or place additional conditions on you because of a bankruptcy filing. Government agencies also cannot otherwise discriminate against you based on a current or past bankruptcy filing.

Employment & Wage Garnishment

Even if you have not filed bankruptcy, it is illegal for your employer to fire you for one wage garnishment related to one debt. However, your employer can fire you if you have multiple wage garnishment orders for more than one debt.
Wage garnishment orders may arise for debts owed for court-ordered and past-due child support, alimony or spousal support, federal/state/local fines, past-due income tax at the federal or state level, past-due property taxes, lawsuit judgments, or defaulted student loans.