Can my Boss Fire me if I File for Bankruptcy?

A common question that both my Chapter 7 and Chapter 13 bankruptcy clients ask is: Can my boss fire me if I file for bankruptcy in Georgia? Bankruptcy is often an emotionally draining process, filled with uncertainty about one’s short and long-term financial future, so for the bankruptcy client, the threat of unemployment is especially frightening. Recent news reports indicate that the “Great Recession” has hit Atlanta especially hard. Often times, debtors file bankruptcy in the first place to protect crucial income and avoid garnishment of their wages, making a bankruptcy even scarier if it is likely to cost them their job. With high unemployment rates both in Georgia throughout the country, debtors have very real fears about whether they will be able to find a new job in the event of job loss.

Luckily, there is some good news. The Bankruptcy Code, which is the law that sets out the rules and requirements for a consumer bankruptcy in Georgia and other states (people filing bankruptcy under Chapter 7 or Chapter 13), contains an Antidiscrimination Provision in 11 U.S.C. §525(b). This states that:

“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, solely because such debtor or bankrupt –

(1) is or has been a debtor under this title or a debtor or bankruptcy under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.”

Under this law, private employers are prohibited from firing and employee or denying employment to parties who have filed bankruptcy. It is illegal for them to do so. However, some employers obtain credit reports of potential employees as a screening method before hiring. If you work in financially related industries such as banking or you are applying for a position where you will be handling money (bookkeeper, accountant, payroll), this is especially common and something to take into account as you make the decision whether or not to file.

If you are facing garnishment or foreclosure and considering bankruptcy, it is crucial to consult an attorney experienced in bankruptcy matters who to help you evaluate your individual situation and explain your legal options. For a complimentary consultation please contact The Law Offices of Charles Clapp at (404) 585-0040 to schedule a free consultation.