Can you be fired for filing bankruptcy?

 

Answer:  No. An employer can not fire an employee for filing bankruptcy.

When a person files for bankruptcy, the have many worries on their mind. The last thing they need to worry about is whether or not they could be fired for having a bankruptcy filing on their credit report. Many employers perform periodic background checks on their employees as a term of continued employment. Frequently a credit check is part of employer’s background check. The Bankruptcy Code, 11 U.S.C. § 525, provides an exception to the Texas employment at-will doctrine.

Section 525 of the bankruptcy code provides protections for two types of workers, protection for government employees in § 525(a) and protection for for private employees in § 525(b). “A governmental unit may not… deny employment to, terminate the employment of, or discriminate with respect to employment against”a person who has filed for bankruptcy. 11 U.S.C. § 525(a).  The later prohibits private employers from “terminat[ing] the employment of, or discriminat[ing] with respect to employment against” a person based on a bankruptcy filing.

In Texas,  it remains unclear if  § 525(b) protects employees who have announced to their employer but have not yet filed for bankruptcy. The best practice is for employees to not inform their employers of bankruptcy filings until the bankruptcy proceeding has been filed and started.

 

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