Nearly 150,000 consumer bankruptcy cases were filed in March 2010, the highest monthly consumer filing total since Congress overhauled the Bankruptcy Code in 2005, says the American Bankruptcy Institute (ABI). Chapter 13 filings (where consumers pay back some or all of their debts) made up a quarter of all consumer cases in March. The rest were largely Chapter 7 cases where most of the consumer's debts were discharged.

Some of these consumers are filing because they have lost their jobs, but others are worried about holding on to their jobs. That's probably why I've recently been asked the question, Can I be fired from my job if I file for bankruptcy?

The straight answer is "probably not." The federal Bankruptcy Act explicitly prohibits most employers from firing someone simply because they file for bankruptcy. 

On a practical level, it may not be so clear cut. Many smaller employers probably are unaware of this law. Employers in most states, are allowed to review employees' credit reports for specific purposes described under the Fair Credit Reporting Act, as long as they get the written permission of the employee first. Even if your employer didn't see your bankruptcy in your credit file (and they can), they would see any late payments leading up to your bankruptcy, and that could be a reason for dismissal. 

However, while bankruptcies are matter of public record, it's probably unlikely that your employer would know you filed unless you live in a really small town where everybody knows everybody else's business, or your employer regularly reviews credit reports.

Gerri Detweiler – Personal Finance Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.

Nearly 150,000 consumer bankruptcy cases were filed in March 2010, the highest monthly consumer filing total since Congress overhauled the Bankruptcy Code in 2005, says the American Bankruptcy Institute (ABI). Chapter 13 filings (where consumers pay back some or all of their debts) made up a quarter of all consumer cases in March. The rest were largely Chapter 7 cases where most of the consumer's debts were discharged.

Some of these consumers are filing because they have lost their jobs, but others are worried about holding on to their jobs. That's probably why I've recently been asked the question, Can I be fired from my job if I file for bankruptcy?

The straight answer is "probably not." The federal Bankruptcy Act explicitly prohibits most employers from firing someone simply because they file for bankruptcy. 

On a practical level, it may not be so clear cut. Many smaller employers probably are unaware of this law. Employers in most states, are allowed to review employees' credit reports for specific purposes described under the Fair Credit Reporting Act, as long as they get the written permission of the employee first. Even if your employer didn't see your bankruptcy in your credit file (and they can), they would see any late payments leading up to your bankruptcy, and that could be a reason for dismissal. 

However, while bankruptcies are matter of public record, it's probably unlikely that your employer would know you filed unless you live in a really small town where everybody knows everybody else's business, or your employer regularly reviews credit reports.

Gerri Detweiler – Personal Finance Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.