When prospective clients come to me seeking bankruptcy advice in San Jose, they are often concerned that if they file bankruptcy, their employer might find out about their bankruptcy filing and that this might adversely affect their employment. This is a very real concern on the part of many folks considering filing bankruptcy in the Bay Area. After all, these prospective clients already need debt relief and are unable to pay their debts even though they have a job. If they lost their job as a result of filing personal bankruptcy, what then?
First of all, even if your employer did learn of your bankruptcy filing, it is illegal to fire someone merely because they file bankruptcy. Anyone filing Chapter 7 bankruptcy, Chapter 13, or under any other chapter of the Bankruptcy Code is protected from being fired because of bankruptcy. 11 USC §525(a) and (b) protect employees from bankruptcy discrimination. The former applies to government jobs, and the latter applies to private employers.
But even after I explain to folks who come to me seeking bankruptcy help that they can’t be fired for filing bankruptcy, many are still worried that their employer might find out about their bankruptcy because they are concerned about the shame they associate with bankruptcy.
While bankruptcy filings are public records, and the fact that you file personal bankruptcy will appear on your credit reports, employers do not in general spend their time and resources reviewing their current employees’ credit reports or waste time pouring over recent bankruptcy court filings. Why would they? They know they can’t fire anyone for filing bankruptcy, so why would they waste time and money on such a futile effort?
That said, there are reasons why in some cases an employer may learn about one of our Bay Area bankruptcy client’s case. The most common reason is that we must stop a wage garnishment that is in effect before we file the bankruptcy case. If there is a wage garnishment in effect when we file, then we must notify the creditor who obtained the wage withholding order, the civil division of the sheriff’s office that instituted the wage garnishment, and the employer’s human resources department or payroll department which is actually withholding the employee’s wages. Obviously, if we are to stop a wage garnishment, then the employer is going to learn of the employee’s bankruptcy, but so what? The employer already knows that the employee has a debt that led to a wage garnishment, and I am sure that the employer is generally relieved that the bankruptcy will stop that wage garnishment and allow the employee to focus on her job rather than her debts.
Finally, as I wrote here in the Bay Area Bankruptcy Lawyer Blog several months ago, California has recently enacted AB 22, which prohibits most California employers from reviewing a prospective job candidate’s credit report when considering whether or not to hire that person. California’s new protections go well beyond the Bankruptcy Code’s prohibition against a private employer terminating someone’s employment because of his bankruptcy, because they apply to hiring decisions, not just firing decisions, so those considering bankruptcy in the Bay Area can rest even easier if they are worried about how might bankruptcy might affect not just the job they currently have, but future ones as well.
If you have debts from judgments, credit cards, home equity lines, personal liability for business debts, or are facing foreclosure in the Bay Area, do yourself a favor, and get bankruptcy advice from one of our attorneys. We always offer a free consultation.
