As an Arizona Bankruptcy Attorney, I am frequently asked by my clients, “will filing bankruptcy affect my job.” They are worried that the filing of a bankruptcy will cause them to be fired from their job or that the bankruptcy will cause a demotion. These clients are also worried that the bankruptcy could prevent them from being hired for a job in the future. Both the Bankruptcy Code itself and my 33 years of experience as a bankruptcy attorney show that these fears are unfounded.
The Bankruptcy Code specifically addresses the issue of jobs and bankruptcy. Section 525 of the Bankruptcy Code specifically prohibits discrimination in any form, including termination, by your current employer if you file a bankruptcy. While you could be laid off for some other reason, bankruptcy cannot be one of these reasons. If your employer did try to affect your job due to your filing bankruptcy, that employer would be subject to a bankruptcy court action for contempt and damages. Campbell& Coombs, P.C. is equipped and ready to file such an action should one be required. However, in all my years of bankruptcy practice in Arizona, I have never had and an employer terminate, demote or discipline any of my clients for filing a bankruptcy. This makes logical sense. After all, who would your employer rather have as an employee: The New You after a bankruptcy who is off to your fresh start and not worrying about all your past debts, who can devote all your attention to your job, or the Old You who is constantly being called at work by creditors, who cannot sleep at night while worrying about the bills, or whose paycheck is being garnished leading to extra work for your employer? I know that if I was hiring you, I would want the New, Well Rested, You after bankruptcy as opposed to the Stressed Out, Sleep Deprived, Attention Deficient You before bankruptcy.
Additionally, I have never had any of my bankruptcy clients turned down for a job because of a bankruptcy. Section 525 of the Bankruptcy Code also prevents governmental employers from discriminating against you solely because of your bankruptcy. While this bankruptcy code section currently does not apply to non-governmental employers, I have yet to see non-governmental employers engage in such bankruptcy discrimination in their hiring practices. My clients are often worried because employers sometimes check credit reports when they hire someone. Once again though, you must contemplate, who is going to make the better impression: the Old You with many past due bills showing along with court judgments, or the New You who took charge of his or her life and fixed the problem by filing bankruptcy.