DISCRIMINATION AGAINST A BANKRUPTCY FILER IS ILLEGAL

Many clients have the understandable concern that if they seek help and protection from their bills, that they will face negative consequences.

The U.S. Bankruptcy Code actually protects people who have filed for bankruptcy from discrimination.  Section 525(a) of the Code provides:

"a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act. "

This section of the Code governs discrimination by governmental units (Federal, state, local government, for example, as well as other governmental agencies, authorities, boards, etc.)

Therefore, a person who has filed for bankruptcy cannot, for example, be denied a job with the government because of a bankruptcy filing, denied a drivers license, the right to live in public housing, and many other services regulated by various levels of government.

Section 525(b) covers private employers, although, you should take note that it can be challenging to prove in court what the motive of a private employer really was.

Many people have been unaware of the protections built into Federal law to make the bankruptcy filing a true fresh start by making illegal various forms of discrimination against somebody who exercised their legal right to be free from debts.