Imagine a situation where your finances are a mess. You have serious debt issues, and despite trying your best to pay off your debts, you are in over your head. There is no way you will be able to pay off your debts, so you make the decision to file for Chapter 13 bankruptcy in Alabama. The next thing you know, your employer fires you because you filed bankruptcy. Is this legal? The United States Courts explain it is completely illegal to fire you because you filed for bankruptcy.
The law is specific in that it says your employer cannot fire you because you file for bankruptcy. Unless your employer has another valid reason for the termination, he or she is breaking the law. Firing someone for filing bankruptcy is discrimination under the law. Neither the government nor private employers may use your bankruptcy as grounds for terminating you.
Furthermore, your bankruptcy cannot bar you from renewing a license or a franchise agreement. Agencies cannot revoke or suspend a license or franchise agreement either. In addition, your bankruptcy cannot be a factor in hiring decisions or in other employment decisions.
Of course, as with any discrimination issue, if your employer has other valid reasons for firing you, then that is okay. The bottom line is that your employer cannot fire you just because of the bankruptcy. If he or she can prove there are other important factors and the timing just happened to be when you filed, then it is probably going to be legal. This information is for education only. It is not legal advice.