I worked for the federal government as an auditor up until Friday for 14 years. I was getting divorced and our marital debt was aprox $300k. Because my income was much greater than that of my ex the courts said we both needed to file bankruptcy. I asked my manager if this would be a problem with my job and they said no. So I filed and when my bankruptcy was finalized I almost instantly got a call from my job telling me that I was being let go because of my bankruptcy.
It sounds like you can sue them but you really need to talk to a lawyer in your area.
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Family Law Attorney
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.
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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.