Most people who are filing for bankruptcy, in Utah or elsewhere, don’t spread the news around at work. Your legal and financial issues are private matters, after all.
In many cases, however, employers learn of the situation anyway, particularly in those cases that involve wage garnishments or income deduction orders.
So what happens if your employer finds out about your bankruptcy? Should you be concerned about your job security? Here’s what the law has to say.
You Cannot Be Fired Because of Bankruptcy
Your personal financial issues are your own, and your employer cannot take action against you simply for filing for bankruptcy or having your debts discharged. It doesn’t matter what type of work you do for a living.
Even people employed in the financial industry have job protection under the law.
If you are fired not long after your employer finds out about your legal proceedings, you may be able to pursue a wrongful termination case. Keep in mind, however, that you could still be fired at any time if your employer has a valid legal reason for doing so.
Filing for bankruptcy won’t protect your job if you have poor performance reviews or attendance issues, for example.
Your Employer Cannot Discriminate Because of Bankruptcy
If your employer learns of your bankruptcy proceedings, they are not legally allowed to treat you any differently than you would have been treated if you had not filed.
Your salary or hours on the job cannot be cut and you cannot be demoted, either in title or in responsibility, simply because of your bankruptcy. And, if your job requires a security clearance, it cannot be revoked for this reason.
In addition, if you are in line for a raise or promotion, your employer cannot take you out of the running on the sole basis of your legal issues.
How Bankruptcy Affects Job Seekers
If you are looking for a new job, you have some protection as well.
Federal, state and local government employers are not legally permitted to consider your bankruptcy when making a hiring decision. Private employers, however, do not have this restriction and can deny you employment based upon your bankruptcy filing.
As many jobs today require credit checks or background checks, it is likely that your financial issues will become known by any prospective employer. Being candid about your bankruptcy during the interview process allows you to put the situation in a positive light and help outweigh any negative connotations or effects.
Lewis Adams and Associates specializes in Utah bankruptcy law and filings. Conveniently located in West Jordan, we serve clients throughout northern Utah. Contact us today to learn more about your legal protections when filing for bankruptcy in Utah.