Is it necessary for my employer to know that I’m declaring bankruptcy?
June 29, 2022
By Diane Drain Attorney & Retired Law Professor
The majority of the time, the answer is no. You can choose to use a plan payment arrangement in which your employer pays the trustee directly. That is something that most of my clients do not want to do. Other attorneys require their clients to use direct payment, which I believe should be the client’s choice, not the attorney’s.
There are two situations in which your employer may be involved. First, the bankruptcy trustee will ask for copies of a number of documents (tax returns, bank statements, etc.). Before filing, one of these items will be copies of some of your pay stubs. If you refuse to provide this information, the Trustee may send a form to your employer, requesting wage information. Second, the monthly Plan payment to the Bankruptcy Trustee is the cornerstone of a chapter 13 bankruptcy. The Court, the Trustee, or your circumstances may require a wage assignment of those Plan payments in some circumstances. Every circumstance is different. Unless you work in a financially sensitive field, the law prohibits your employer from denying you employment based solely on your bankruptcy filing (securities, brokers, etc.).
About the Author: Diane Drain
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
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