Can I get fired from my job for filing Bankruptcy?

Can I get fired from my job for filing Bankruptcy?

I’m what?

For filing Bankruptcy??

Technically, no. It is not legal for any employer to fire you because you filed for bankruptcy. Doing so would be discrimination. As a matter of fact, depending on which Chapter of Bankruptcy you file — your employer may never know you have filed.

Chapter 7:

If you have filed a Chapter 7 Bankruptcy, there is typically no reason for your employer to receive notice of your bankruptcy case. The only times they may need to receive notice is:

  • if you were already being garnished by a creditor, the bankruptcy filing will stop the funds from being taken out of your paycheck
  • if your employer is actually one of your creditors.

Chapter 13:

In a Chapter 13 Bankruptcy, you are in a case for 3 – 5 years, so there might be a little more opportunity for your employer to find out about your case just as a matter of time. However, reasons they would find out directly about the bankruptcy filing would be the same as in a Chapter 7:

  • we provide them Notice of the filing and Automatic Stay so they are aware that the current garnishment should be coming to an end
  • they are your creditor and received direct Notice
  • and/or we request your Plan Payment come from your employer through Income Withholding Order (IWO).

In a Chapter 13 there might be a couple of reasons why you would request that your Plan Payment come directly from your employer:

  • You don’t have to remember to make monthly payments on time
  • Those with an IWO in place vs self-pay have a much higher success rate of Ch. 13 Plan completion
  • It may be required by local rules; for example, if you are behind on your mortgage
  • It may become required if you have fallen behind on your Plan Payments in the past, the Trustee may require a IWO be in place for all future payments.

Big Picture:

If you think about it, most employers might find relief in knowing that their employee filed for bankruptcy. Whereas they may see an employee with financial issues, including high amounts of debt, as a business risk. When you file for bankruptcy, you lower that risk (perceived or actual) for everyone.


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