Can I Lose My Job if I File for Bankruptcy?

Recently I have received a number of bankruptcy inquiries from higher earning individuals who are facing bankruptcy because of the real estate slowdown, the sub-prime mess and other problems in the economy.  Some of these folks have hundreds of thousands of dollars in credit card debt but are fearful about losing their jobs if their employer learns that they filed for bankruptcy.

This concern is often voiced by individuals who work in the financial services industry, such as banks, credit unions, etc.

The short answer to this question is that Section 525 of the Bankruptcy Code does protect debtors against discriminatory treatment by both governmental employers and private employers.   The Code specifically provides that employers may not terminate the employment of an individual who has been a bankruptcy debtor.

One significant difference between the rules relating to private employers and government employers: the government cannot refuse to hire or fire someone who has been a bankruptcy debtor.   By contrast a private employer is only barred from firing a debtor.  There is no prohibition against considering bankruptcy in  hiring decisions.