Does Your Employer Get Notified of a Bankruptcy?
Many people facing bankruptcy today are hesitant to file for bankruptcy protection because they think their employer would get notified if they file. Does your employer get notified of a bankruptcy?
The answer to this question is the employer would be notified only under certain circumstances, and if the circumstances do not exist, your employer most likely would not find out. An employer is much more likely to find out you are having financial problems through a creditor lawsuit than a bankruptcy.
In most cases, a creditor will file a lawsuit against you to collect a debt, get a court judgment for winning the lawsuit, and then have your wages garnished. If you live in a state that allows garnishment of wages, the successful creditor with the judgment will notify your employer by sending them legal court papers to garnish your wages. The employer has no alternative but to comply with the court order.
On the other hand, the moment you file a bankruptcy, a judge will order all collecting actions to cease through an automatic stay. The automatic stay, applicable to all types of bankruptcy filings, stops certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment.
If your wages are currently garnished by a creditor, your employer will be notified by the bankruptcy court that you have filed bankruptcy and they should cease garnishing wages. The best thing to do if you are worried about your employer finding out you have filed a bankruptcy is to avoid getting judgments against you for debt collections. You can do this by using the automatic stay of bankruptcy protection. If you file for protection soon enough, the court will have no reason to notify your employer.
If your employer were to find out you file bankruptcy, laws have been passed to protect you against discrimination. Under Title 11 of the United States Code, section 525, the law prohibits discriminatory treatment of debtors by both governmental units and private employers.
Sub-section (b) of the code states this in relation to private employment: “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt
- is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
- has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
- has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.”
Does your employer get notified of a bankruptcy? The answer is only under certain circumstances that are not likely, especially when you file for bankruptcy protection before your creditors file lawsuits. Before filing bankruptcy, contact a bankruptcy lawyer.