One of the many reasons why people hesitate to file for bankruptcy is that they worry about their life being impacted. While it’s true that you may encounter difficulties with renting an apartment, getting a car loan at a decent interest rate, and other undertakings that require a decent credit score, there are laws that protect you from discrimination by private entities and the government.
Laws governing private entities
In general, you don’t have to worry about bankruptcy costing you your job: the law prohibits private employers from firing you or taking other negative actions because you went bankrupt. However, this protection does not appear to apply to the hiring process, as many employers take credit score into account when making a hiring decision, especially in the financial services industry. If a recent bankruptcy filing caused your score to drop, then it could cost you the job.
If you file for bankruptcy in the middle of an apartment lease, then your landlord cannot use the fact as grounds to evict you. It’s different when you’re apartment-hunting: if a landlord does a credit check and sees the bankruptcy listed, then they can refuse to rent to you or ask you to prepay your rent for a few months.
Laws that apply to government entities
Local, state, and federal government agencies are prohibited from denying you a business license solely because you have a bankruptcy on your record. The Bankruptcy Code also does not allow the government to use your bankruptcy as grounds for:
- Denying you public benefits or terminating them if you are already a recipient
- Having you evicted from public housing (with the possible exception of Section 8 tenancies)
- Refusing to issue you a driver’s license
- Refusing to issue you a contract for a public project
- Denying you a state liquor license or refusing to renew your existing one
- Denying you a government job or firing you if you are already employed
- Excluding you from student loan programs guaranteed by the government
- Holding back your college transcript
Like the private sector, these protections don’t apply to decisions made on the basis of credit-worthiness. A bankruptcy can affect your credit score in ways that prevent you from receiving a government loan or extension of credit on an existing loan.
If a private or government entity illegally discriminates against you because of your bankruptcy, then you can file a claim against them in state or bankruptcy court. Your attorney can advise you on the best approach to take.
Contact a New York bankruptcy attorney
If you desperately need the debt relief but are worried about the potential ramifications of bankruptcy on other parts of your life, then talk to a New York bankruptcy attorney. In some instances, your fears will be unfounded while in others, your attorney can give you the honest answers you need to make an informed decision. Jayson Lutzky is a lawyer with over 35 years of legal experience. He offers free in-person consultations in his office in the Morris Park neighborhood. Call 718-329-9500 to set up an appointment or visit www.MyNewYorkCityLawyer.com/Bankruptcy to learn more.