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Bankruptcy

: Consumer Bankruptcy Blog from Legal Helpers

Can A Prospective Employer Refuse to Hire Me Because of a Bankruptcy?

By Richard K. Gustafson

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My last blog post discussed whether or not an employer could terminate someone’s employment because of a bankruptcy case. The answer was clearly no. Is the answer the same when it comes to a prospective employer hiring you?

If you review 11 U.S.C. Section 525(b) again, as I posted the other day, you’ll see that the answer is not quite as clear. The code says an employer can not discriminate “with respect to employment.” It could be reasonably argued that this would prevent any employer from discriminating in hiring practices just because a candidate had filed for bankruptcy. Most cases interpreting this provision, however, indicate that the statute only applies to the debtor’s current employer and not any employer, [In re Merriweather, 185 B.R. 235 (Bkrtcy.S.D.TX 1995), In re Briggs, 143 B.R. 438 (Bkrtcy.E.D.MI 1992), In re Patterson, 125 B.R. 40 (Bkrtcy.N.D.AL 1990]. Thus, it is questionable whether this protects the debtor from discrimination in applying for new employment.

However, keep in mind, that prospective employers pull credit reports. Many employers will rescind offers of employment or refuse to hire a person merely because of a bad payment history. Thus, if you find yourself considering a bankruptcy case, you are probably having trouble paying your debts as they are due. Even if you are current on payments right now, you likely won’t be in the future and any delinquent payments could equally affect an employment decision in the future.

In fact, some employers would prefer that you have discharged your debts. Many employers would rather not deal with creditors calling its employees during work hours on the job and don’t want the administrative headaches associated with processing wage garnishments. These employers would rather hire someone who is debt-free, instead of someone who has debt problems.

Full post as published by Consumer Bankruptcy Blog from Legal Helpers on September 15, 2006 (boomark / email).