For most people, filing for bankruptcy is not a pleasant or happy experience. For many Alabama filers, it may be a time filled with embarrassment or even shame. So it’s understandable that if you’re thinking about declaring bankruptcy, you have concerns about what people might think.
One of your most pressing concerns may have to do with how your boss will view your bankruptcy if they find out about it. Can they fire you because you’ve filed for bankruptcy? If not, can they take other discriminatory conduct against you?
The answer to both these questions is that it depends. Several variables affect what legal protections you have during bankruptcy, including what kind of employer you’re working for. Many of these protections will come from Section 525 of the U.S. Bankruptcy Code.
If You Already Have a Job
If you’re working for a government or private employer, you can’t be fired because you:
- Filed for bankruptcy.
- Did not pay a debt that was discharged (or will be discharged) in bankruptcy.
- Were insolvent before getting your debts discharged in bankruptcy.
- Have a spouse that filed for bankruptcy.
Your employer also can’t discriminate against you for any of the above listed reasons. Things are a little bit different if you’re looking for a job, however.
What About an Employer Refusing to Hire Me Because of My Bankruptcy?
If you’re applying for a government job, your potential employer can’t refuse to hire you on the basis that you (or specific person associated with you) filed for bankruptcy, did not pay a debt that was discharged in bankruptcy or were insolvent before having your debts discharged in bankruptcy.
However, if you’re applying for a job with a private employer, they may use your bankruptcy history to refuse to hire you. Depending on the job, it’s common for employers to conduct credit checks of applicants. When they do this research on you, your bankruptcy will come up.
Employment At-Will: There’s the Law and There’s What People Do
If you’ve already got a job, you can feel fairly secure in keeping that job if you file bankruptcy. But if you’re like the majority of workers in Alabama, you are employed “at will.”
At-will employment means you or your employer can terminate the employment relationship at any time and for any reason (or no reason at all). There are exceptions to this rule, and one of those exceptions may prohibit your Alabama employer from firing you because you filed for bankruptcy.
Even if Alabama courts would bar an employer from firing an employee for a history with bankruptcy, the problem is that unless your employer tells you this is why they’re firing you, it will be very difficult to prove you were fired for an unlawful reason. Remember, at-will employment means you can get fired for no reason at all. Or your employer can lie about why they’re firing you.
Are You Facing Bankruptcy Discrimination?
If you feel your employer has discriminated against you because you filed Chapter 7 or Chapter 13 bankruptcy, you may have legal options available. To learn what these are, you need to meet with a Montgomery bankruptcy lawyer or a bankruptcy lawyer wherever you are living to properly go over your particular financial situation and determine the best way to proceed.
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