Can I Be Discriminated Against for Filing Bankruptcy?

TRI Writer • August 10, 2022

Federal laws against bankruptcy discrimination were introduced in 1971 when the U.S. Supreme Court decided the Perez v. Campbell case.

Details of the Case: Perez v. Campbell

In Perez v. Campbell, the plaintiff argued that the state could not deny a person a driver’s license based on an unpaid court judgment included in a bankruptcy discharge. Perez won the case. The Perez v. Campbell ruling prompted the U.S. Congress to make federal law 11 U.S.C. section 525, a more general ban prohibiting the government (and private employers) from discriminating based on bankruptcy.

Protection from Government Bankruptcy Discrimination:

Federal bankruptcy nondiscrimination laws protect filers from discrimination based on their filing. The law prohibits various forms of government discrimination against bankruptcy petitioners:

  • Terminating a debtor’s employment due to the debtor’s bankruptcy case
  • Discriminating against a petitioner during the hiring process
  • Denying a government grant due to bankruptcy
  • Listing certain conditions related to bankruptcy on a grant application
  • Denying, suspending, canceling, revoking, or declining a license, franchise, or other privileges due to a bankruptcy petition or bankruptcy discharge

The courts have shown a history of interpreting this ban broadly. The same U.S. Code provision prohibits the government from discriminating against anyone for associating with a bankruptcy petitioner. The protection offered to associates of bankruptcy petitioners potentially protects family members, business partners, etc.

Protection from Job Loss Due to Bankruptcy Discrimination:

Can your employer fire you for filing bankruptcy? No, employers are prohibited from discriminating against bankruptcy filers by the same federal statute that bans the government from actively discriminating based on bankruptcy. The law prohibits various types of bankruptcy-based discrimination in the workplace:

  • Terminating an employee due to their bankruptcy case
  • Discriminating against an employee’s family or friends because the employee filed bankruptcy
  • Discriminating against a potential new hire because of their bankruptcy case

If you have experienced discrimination based on your bankruptcy or need to discuss the details about filing bankruptcy in Tennessee or Georgia, don’t hesitate to call Kenneth C. Rannick, P.C., Tennessee and Georgia bankruptcy attorney. We help good people through bad times.

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