William G. Schwab and Associates
811 Blakeslee Blvd. Dr. East (PA Route 443) PO Box 56 Lehighton, PA 18235
Tel 610-377-5200 Fax 610-377-5209
NEWSLETTER
Bankruptcy September 24, 2016
 
Personal Injury
Bankruptcy
Business
Criminal Law
Elder Law
Estate Planning/Probate
Real Estate
 

Fraudulent Bankruptcy Filings

Bankruptcy fraud has become a common way for debtors to abuse and manipulate a system that was intended to help ...(more)

 

Prohibiting Abuse by Credit Repair Clinics Under the CROA

Credit repair clinics generally promise consumers that they will permanently remove negative information from credit reports, for a fee. A ...(more)

 

Roles of the Bankruptcy Judge

A United States bankruptcy judge has the ultimate discretion whether to grant requests for bankruptcy relief. In addition, the judge can issue ...(more)

 

Income from Debt Cancellation

When you obtain bankruptcy relief, you are essentially receiving a financial benefit, because most, if not all, of your debts ...(more)

 

Bankruptcy Law In The News

Former NFL Quarterback Vince Young Files For Bankruptcy

Central California Diocese Files for Bankruptcy

Duke Energy settles suit over Crescent bankruptcy

Detroit water department mediation to continue next week

Detroit bankruptcy plan threatens survivor benefits of families of fallen cops, firefighters

Protection Against Employment Discrimination Based on Bankruptcy


Section 525 of the U.S. Bankruptcy Code prohibits employers from firing or otherwise discriminating against a person who "is or has been a debtor" in bankruptcy.  This anti-discrimination provision of the Code is intended to further the goal of allowing debtors who have formally filed for bankruptcy to make a "fresh start."
 
Scope of Protection
The prohibition against employment discrimination based on bankruptcy applies to both government employers and private employers, and is meant to protect the following categories of people:
  • An individual who is or has been a debtor
  • An individual who has been insolvent prior to the commencement of a bankruptcy case, or during a case before grant or denial of a discharge
  • An individual who has not paid a debt that is dischargeable in a bankruptcy case, or that has been discharged under the Bankruptcy Act
Intent to File Does Not Warrant Debtor Protection
The U.S. Court of Appeals for the Ninth Circuit has set forth a bright line rule for determining exactly which employees are protected by Section 525.  Specifically, the court held that an employer who fires a debtor employee after learning of the debtor employee's intent to file bankruptcy does not violate the Code.  Rather, protection only extends to employees who have already filed for bankruptcy.
 
In the aforementioned case, the debtor was hospitalized and incurred substantial medical expenses at a hospital where he was also employed.  The debtor was ultimately unable to pay off his debt and informed the hospital that he was planning to file for bankruptcy.  Subsequently, the hospital fired the debtor.  The court ruled that the debtor did not have a valid action against the hospital for unlawful termination under Section 525, because the Code's protection extends only to an individual who "is or has been a debtor."  In this case, however, the hospital fired the debtor before the debtor filed for bankruptcy.  As such, Section 525 did not apply. 

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