No job discrimination following bankruptcy

The Bankruptcy Code has specific rules that prevent job discrimination following bankruptcy.

Both public and private employers are prohibited from discriminating against people who have filed for bankruptcy.

When Congress passed the Bankruptcy Code, one of its goals was to give debtors a fresh start, and in order to have a fresh start, a debtor must be able to work.

Congress knows this and wants people to be able to work after filing for bankruptcy, so they made it illegal for employers to discriminate against people who file for bankruptcy.

This includes both your current employer and any future employers.

You can’t lose your job simply for filing for bankruptcy

It also makes practical sense that employers wouldn’t discriminate against someone who filed for bankruptcy, because after you file, you will be in a better financial position than beforehand.

Is there a risk for employers?

Not really as:

An employee who owes thousands of dollars of debt and is in danger of getting his or her paycheck garnished is more likely to steal from their employer
Having lots of debt can drive people to do things that they would not normally do, so a smart employer would prefer someone who has just filed bankruptcy and has no debt over someone who hasn’t filed, but has lots of debts that must be paid

Are there any exceptions?

The one exception to this rule, at least here in Minnesota, seems to involve:

Applying for an insurance broker’s license

The licensing board for insurance salesmen often looks badly at a bankruptcy when deciding whether to issue a new license, however:

This does not always prevent you from getting a license, and it usually won’t stop getting a renewal of a license

What about security clearance?

A bankruptcy usually does not affect your ability to get a security clearance

I have filed lots of cases for people who needed security clearances for their work, and those who already had the clearance kept it, whereas those who needed to get the clearance were not blocked by the bankruptcy.

I am sure that if you did not list all of your assets in your Chapter 7 bankruptcy or Chapter 13 bankruptcy, that failure to list everything could cause problems with security clearance.

But the vast majority of people who file for bankruptcy are completely honest and are turning to bankruptcy only once it has become clear that their income is insufficient to pay their debts.