No! The law prohibits any employer – whether government or private in Oregon or Colorado – from firing you because of bankruptcy. It is also unlawful for any employer to discriminate against you in other ways like reducing your salary, demoting you, or taking away your responsibilities just because you filed bankruptcy.
This does not mean, however, that you are protected from being fired if your employer has other legitimate reasons to do so. In other words, if your employer wants to take negative action against you because of bankruptcy, he or she can do so by validating the firing for other reasons like tardiness, dishonesty, and insubordination. But if you are fired shortly after your employer finds out about your bankruptcy, you may have a case against your employer for illegal discrimination and termination.
Employers rarely ever know about Chapter 7 bankruptcies in Oregon or Colorado, and there is usually no reason your employer to find out. However, if a creditor has already sued you, obtained a judgment, and started garnishing your wages, your employer will obviously get the news about your financial problems. Chapter 7 bankruptcy’s automatic stay will stop the wage garnishment, and your employer will be notified about it so that you can start receiving your full paycheck again. In such a situation, your employer will probably welcome your bankruptcy as a sign you are taking responsible steps to put your problems behind you by rebuilding good credit.
If you file for Chapter 13 bankruptcy in Oregon or Colorado, your employer is likely to learn of your bankruptcy case. If you have a regular job with regular income, the bankruptcy judge may order your Chapter 13 payments to be automatically deducted from your wages and sent to the bankruptcy court. (This is called an “income deduction order.”) In effect, the court makes your employer act like a collections agency that makes sure you honor the terms of your Chapter 13 plan.
If you are a member of the armed forces or an employee of the CIA, FBI, another government agency, or a private company that contracts with the government, you may have a security clearance. Will your security clearance be in jeopardy if you file bankruptcy? The chances are slim. In fact, the opposite may be true. According to credit counselors for the military and CIA, a person with financial problems – particularly someone with a lot of debt – is at high risk of being blackmailed. By filing for bankruptcy and getting rid of debts, you will substantially lower that risk. Bankruptcy often works more in your favor than it does to your detriment.
If you’d like to discuss the specific facts of your case, contact our offices in Portland, Oregon, Denver, Colorado, or Colorado Springs, Colorado today for a free consultation.