There are a lot of fears people have when filing a bankruptcy case.

  • Will I lose my home? (Not if your case is prepared correctly and you file under the proper chapter for your situation)
  • Can I keep my car? (See above)
  • Will I ever have credit again? (Of course)

Most of these fears are unfounded.

One common fear is that your employer will be notified of your bankruptcy filing.

In most cases, this is nothing to worry about.

Bankruptcy Is Public Record

Just to get this out of the way, bankruptcy records are public.  That means, with the exception of your social security number and data specifically excluded by the court in a given case, everything in your bankruptcy petition is not private.

That’s the bad news.

The good news is, unless someone is looking for it, it’s unlikely they will find out about the bankruptcy filing.

Employers Are Not Notified of Bankruptcy Filings

Unless you owe your employer money on the date your bankruptcy case is filed, your employer will NOT be notified of the bankruptcy.

If you do owe your employer money, because they gave you an advance on your paycheck or otherwise loaned you money, then they must be listed as a creditor and will be notified.

That, of course, doesn’t mean that you can’t repay them.  But you legally won’t have to anymore.

Note in Chapter 13 Cases:  If you miss the required payments to the Trustee in a Chapter 13 case, some Trustees will automatically send in a pay garnishment to your employer, so it is possible your employer could find out that way, although depending on how large the company is, it’s certainly possible the payroll department isn’t going to be speaking directly to your boss about it.

So What If Your Employer Does Find Out?

Happily, there really isn’t really anything your employer can do legally if you file a bankruptcy case.

You cannot lose your job because you filed bankruptcy.

Your employer cannot fire you because of the bankruptcy without violating a federal statute (11 U.S.C. §525) which prohibits discrimination on the basis of a bankruptcy filing.

A lot depends on what type of job you have as to whether it can affect future advancement or things like that, but if you can prove the reason for any denial was your bankruptcy filing, your employer can be held liable for discrimination.

Usually this is all a non-issue with employers.

Problems with your employment is something which should be discussed with your bankruptcy attorney and the risk of it being an issue should be factored in to your decisions, but in general it should not be an impediment to you proceeding to get your fresh start.

Image Courtesy of Jeff