It sounds like you can sue them but you really need to talk to a lawyer in your area.
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.
11 U.S.C. § 525(a) prohibits the government from discriminating against an employee in either hiring or in existing employment (i.e., termination). A couple of caveats, though. First, if your position had any kind of security clearance, that may have been invoked to allow it. Second, and more importantly, you'll have to PROVE that the bankruptcy was the reason you were terminated. I'm curious why, if your manager was so sure there would be no issue, you were suddenly terminated. Was this conversation recorded or notes taken? Were you given a written reason for the termination? You'll want to speak with an employment law attorney ASAP.
We can be reached at 507.334.0155 (Toll Free: 888.777.5009). Our web address is: www. corbin-law-office.com. Answers on Avvo are not to be considered a response to a specific legal issue in a specific jurisdiction - they are to be considered only general responses to hypothetical scenarios posed by the questioner. For specific legal advice, please consult with a licensed attorney in your jurisdiction. No information contained herein should be construed as a solicitation for business, an offer to perform legal services in any jurisdiction in which the attorneys of Corbin Law Office are not licensed, or the dissemination of legal advice. No creation of an attorney-client relationship should be assumed or implied. We are a debt relief agency. Corbin Law Office helps people file for bankruptcy relief under the bankruptcy code.
A federal statute, 11 U.S.C. section 525, provides that "a governmental unit may not ... terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act . . . solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act."
This statute seems to make it unlawful for the federal government to discharge you on the solely on the basis of your having gone bankrupt. Consult a lawyer who handles employment discrimination cases in your state. There may be case law directly on point with respect to your circumstance of which I am unaware, but an employment lawyer who handles such cases in your state may be able to advise you competently on this point.
Not legal advice as I don't practice law in Michigan. It's just my two cents. If you need legal advice, and I think you DEFINITELY NEED LEGAL ADVICE, please consult a lawyer who practices employment law in Michigan. I don't hold Michigan licensure and practice in Vermont ONLY.