Welcome to Broumas Law Group LLC

Discrimination by Public and Private Employers Based on Credit Reports and Bankruptcy


Jefferson Bankruptcy

Thomas Jefferson

Lincoln Bankruptcy

Abraham Lincoln

As a Maryland Bankruptcy lawyer I feel we are blessed to live in a country founded on principles that promote the rights of the individual, personal freedom and the right to privacy in our homes and personal lives. This country has nurtured many great political leaders, great entrepreneurs and creative geniuses. Among them one of our founding fathers and drafter of the United States Constitution, Thomas Jefferson, our countries 16th and possibly greatest president, Abraham Lincoln, who helped preserve this great country.

Bankruptcy Lawyer

Ulysses Grant

Bankruptcy Attorney

Henry Ford

Bankruptcy Layer

Walt Disney

bankruptcy attorney

Mark Twain

Our 18th President Ulysses Grant, Great entrepreneurs and businessmen like Henry Ford, who invented the automobile and revolutionized the modern factory to mass produce those cars.

Walt Disney, a brilliant creative businessman who changed the world of entertainment. Great writers such as Samuel Clemens (Mark Twain). All these great people share at least one thing in common: they all had to file bankruptcy. All of these people would be unemployed and unable to make a living in this great country if we decided whether to hire them based on a modern credit report.



business bankruptcy

Donald Trump

One of our current presidential candidates, billionaire, Donald Trump filed bankruptcy for his casino business (Mr. Trump did not file personal bankruptcy however). It is against this backdrop that we start a discussion of a new social cancer: The misuse of people’s private credit information to keep them from working and achieving the American dream. Private employers will often request a credit report as part of their pre-employment process. Most people who are in financial trouble are in that situation because of things that are beyond their control, loss of a job, illness, divorce. Why is it reasonable or fair to deny these people a chance to have a normal life?



maryland bankruptcyLeaving aside the unfairness, we have all seen people in the workplace share confidential information about co-workers with their friends. Is it right to give the clerical staff in H.R. access to information about how much you pay your mortgage company, what cars you drive, where you shop. Who wants to give these minions sitting in cubicles in the back office access to our private information? They are not lawyers, CPA’s or for that matter regulated by anyone. They don’t lose a license if they violate ethical standards. In fact the people handling these private records are not regulated at all.



maryland bankruptcyThis Orwellian practice puts many people in a terrible situation especially when their financial troubles are caused by situations that are beyond their control. Many states are enacting laws to counter this unfair practice. Maryland recently enacted the Job Applicant Fairness Act which limits access to credit reports in the context of employment to employers who are

  1. Required by state of Federal law to check credit of prospective employees;
  2. Federally insured banks;
  3. Certain credit unions;
  4. Employers who are registered as investment advisors with the SEC;
  5. An employer with a bona fide reason for requesting or using the information that is substantially job-related and disclosed in writing to the employee or applicant.

The last category will allow employers to obtain credit reports on employees who are “managerial” setting direction and control of a business, department, division etc.; persons who are fiduciaries; persons with access to expense accounts or company credit cards and persons with access to sensitive personal information.





Bankruptcy law has similar and seemingly broader protections from employer abuse. All Federal, State and local governments are prohibited from discriminating against an individual for filing bankruptcy or because that individual was insolvent before filing the bankruptcy:

a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, 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, or another person with whom such bankrupt or debtor has been associated, 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.

With respect to any government job it seems pretty clear that the employer cannot in any way discriminate against an employee or a prospective employee.



In 1984 Congress added a new anti-discrimination section targeting private employers. This section of the Bankruptcy code pretty clearly prohibits discrimination by private employers when dealing with employment solely because the person filed bankruptcy or was insolvent before the bankruptcy was filed:

No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.



If you walk down the street and ask passersby what the text of this section means they would tell you its obvious. The person on the street would tell you confidently the employer cannot refuse you employment for filing bankruptcy, because they would be discriminating with respect to employment.At least one Court agreed with this common sense approach. In Leary v. Warnaco, Inc., 251 B.R. 656 (S.D.N.Y. 2000) the plaintiff, Ms. Leary was denied employment based on a credit report that showed she had filed bankruptcy. Deciding in favor of Ms. Leary the court stated:

maryland bankruptcy lawThe plain meaning of the statute does not support such a gloss. Section 525(b) prohibits an employer from discriminating “with respect to employment.” Such language is clearly broad enough to extend to discriminating with respect to extending an offer of employment. Such an application of the plain meaning of the statute makes sense. The evil being legislated against is no different when an employer fires a debtor simply for seeking refuge in bankruptcy, as contrasted with refusing to hire a person who does so. The “fresh start” policy is impaired in either case. A Court should not go out of its way to place such an absurd gloss on a remedial statute, simply because the scrivener was more verbose in writing § 525(a).

Unfortunately this court is in the minority. Lawyers do not always read plain English the way everyone else does. Most courts deciding the issue have gone the other way to say that the language is only clear with regard to existing employees, not prospective employees. They reach this result because the statute that deals with governmental discrimination is very specific when it says the government shall not “deny employment” and the one dealing with private employment discrimination does not.



Despite the controversy the alternative to filing bankruptcy is in most cases much worse. At least when you file bankruptcy your credit starts to improve. The employers using credit reports will now, more than ever be sensitive to the restrictions on the use of credit reports as States such a Maryland restrict the practice.

In most cases there are no viable non-bankruptcy alternatives. If the employer is uses a credit report to make decisions about hiring the bad credit will be there forever unless the client files bankruptcy and wipes it away. Credit counseling does little to fix the problem in 99% of cases. The clients do not have money left over to pay a costly payment plan. Moreover, the plans are not only not affordable, they only deal with a small number of consumer debts, and the program is voluntary for the lenders. Because interest is often still charged by the lenders that do participate it often takes years before any noticeable balance reduction happens. At least if you file bankruptcy and are discriminated against there is a potential for liability based at least on one courts interpretation of the law.



Below is a list of other famous, successful Americans who filed bankruptcy:

cheap bankruptcy attorneycheap bankruptcy lawyerfree bankruptcyfree bankruptcy marylandJohn Connally – Former US Secretary of the Treasury and Former Governor of Texas.

Daniel Webster – Former Secretary of State

William McKinley – 25th United States President

P.T. Barnum – Founder of Barnum and Bailey Circus

free bankruptcy marylandmaryland bankruptcy lawyerbankruptcy lawyerH.J Heinz – Founder of the H.J Heinz Ketchup Company

William Durant – Founder of General Motors

William Fox – Founder of 20th Century Fox Film Corporation



A lot of people who come to our office for bankruptcy help feel very guilty about the fact that they need to go through the bankruptcy process. It is understandable and our experienced Maryland Bankruptcy attorney is here to provide our clients with different bankruptcy and non-bankruptcy options to help our clients resolve their financial mess. Allowing people to get rid of debt and have a fresh start is a great option that many other countries do not offer. You deserve a chance to fulfill your American dream and be successful. Take your first step.


No Comments

No comments yet.

RSS feed for comments on this post.

Leave a comment

You must be logged in to post a comment.

Call Us Today (410) 840-7575