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The Debt Discharge in Bankruptcy FAQ


Q: Can an employer terminate a debtor's employment solely because the person was a debtor or failed to pay a discharged debt?

A: The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case.

The law prohibits the following forms of governmental discrimination against bankruptcy debtors:

  • Terminating an employee;
  • Discriminating with respect to hiring; or
  • Denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege.

A private employer may not discriminate with respect to employment (hiring, promotion, unequal treatment, termination, etc.) if the discrimination is based solely on the bankruptcy filing.

From the Administrative Office of the U.S. Courts


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