The
answer is clearly set forth in Section 525 of the Bankruptcy Code titled,
"Protection against discriminatory treatment. Paragraph (b) of the Section
is specific in its prohibitions:
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
–
- 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
The
"no" answer to the individual contemplating bankruptcy is important
to that individual but is equally important to employers who may not realize
the statutory prohibition against a bankrupt person by terminating the
individual or refusing to employ an individual who has been bankrupt.
While
the "no" answer is comforting to the would-be-bankrupt, it is an
answer to a question that should be posed by employers, or would-be employers,
before they take action that would be in violation of Sec.525.
Alas,
the law is not always without exceptions. Debts incurred as a result of
defalcation of a fiduciary duty, larceny, fraud, deceit and other acts of
dishonesty, malfeasance and criminal intent, while generally non-dischargeable,
may well be justification for either terminating or not employing an individual
where such conduct is related to the position of employment. Although
"no" is the general, statutory answer, a prospective debtor and present
and past employers are best advised to consult with counsel concerning specific
facts and situations.
by: Eugene B. Berman, Esq.
