Posted by Wesley Scott on October 17, 2018 at 3:40 PM
Wesley Scott

Section 525 of the Bankruptcy Code provides protections against discriminatory treatment. Section 525(b) of the Bankruptcy Code provides that a private employer may not terminate the employment of, or discriminate with respect to the employment of a person who has or will file Chapter 7 Bankruptcy.

So there, that settles that. An employer cannot terminate you solely because you sought protection under Chapter 7 Bankruptcy, or because you will be seeking protection under Chapter 7 of the Bankruptcy Code. I have never had a client call me and say they have been terminated by an employer for filing Chapter 7 Bankruptcy.

The other area that clients get concerned about is student loans. Can I be denied student loans if I file Chapter 7 Bankruptcy? We have a lot of people who are going back to school these days. The last thing they need is to be denied student loans because they filed Chapter 7 Bankruptcy. Fortunately, Section 525(c) of the Bankruptcy Code prohibits any discrimination based on filing bankruptcy. If you file Chapter 7 Bankruptcy, you can immediately proceed to take out student loans and go back to school!

If you are in the middle of applying for student loans and then you file bankruptcy, you may have to reapply for the student loans. However, I have never had someone get denied for student loans after filing a Chapter 7 Bankruptcy.

The idea of these protections is to make sure that no one impairs your fresh start. If we allowed employers or schools to discriminate based on bankruptcy 1) there would be a lot of employees out of work and 2) there would be far fewer students enrolled in universities.


When the time is right, or when you are ready, reach out to Minnesota’s best bankruptcy law customer service experience at www.kainscott.com. You will be so glad you did!

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Topics: Chapter 7 Bankruptcy, Filing Bankruptcy, MN Bankruptcy

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