Section 525 of the Bankruptcy Code does stipulate protections against discriminatory treatment for bankruptcy filers. The code provides that a, “governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise deny employment to, terminate employment of…” a bankruptcy debtor. 11 U.S.C. § 525. Additionally, no private employer may terminate employment or discriminate against a debtor solely because the debtor filed bankruptcy.
This Section provides protection from government units, but the bankruptcy code fails to accord to debtors the same degree of protections against discrimination by private individuals or entities.
Congress intended to prevent governmental units from interfering with the debtor's opportunity for a fresh start. The prohibition extends only to discrimination or other action based solely on the basis of the bankruptcy. It does not prohibit consideration of other factors, such as feasibility to pay, if the other requirements are applied non-discriminatorily.
For example: a debtor cannot be turned away from a government subsidized rental unit simply because she filed for bankruptcy protection. But merely because a person files for bankruptcy does not mean she is protected from eviction simply because she rents from a governmental unit. Section 525 is meant to protect bankruptcy filers from discrimination, it was not meant to insulate the debtor from non-discriminatory factors, reasons or requirements.
The Bankruptcy Code is designed to give a debtor a fresh start. Section 525 helps to safeguard that goal by ensuring a debtor is not punished simply because they filed bankruptcy.
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The Bankruptcy Code offers debtors some protection from discriminatory treatment, but governmental units are still able to apply non-discriminatory requirements to bankruptcy debtors. Find out if a fresh start is right for you, and contact the attorneys at Kain and Scott and see us at www.kainscott.com.
