11 U.S.C. § 525 | Protection against discriminatory treatment

(a)

June 30, 1944July 12, 1943 Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending , and for other purposes,” approved , 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.

(b)

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.

(c)

(1)

A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt has been associated, because the debtor or bankrupt 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 a case under this title or during the pendency of 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.

(2)

In this section, “student loan program” means any program operated under title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.

Pub. L. 95–598Nov. 6, 197892 Stat. 2593 Pub. L. 98–353, title III, § 309July 10, 198498 Stat. 354 Pub. L. 103–394, title III, § 313Oct. 22, 1994108 Stat. 4140 Pub. L. 109–8, title XII, § 1211Apr. 20, 2005119 Stat. 194 Pub. L. 116–260, div. FF, title X, § 1001(c)Dec. 27, 2020134 Stat. 3217(, , ; , , ; , title V, § 501(d)(15), , , 4145; , , ; , , .)

Historical and Revision Notes

senate report no. 95–989

Perez v. CampbellThis section is additional debtor protection. It codifies the result of , 402 U.S. 637 (1971), which held that a State would frustrate the Congressional policy of a fresh start for a debtor if it were permitted to refuse to renew a drivers license because a tort judgment resulting from an automobile accident had been unpaid as a result of a discharge in bankruptcy.

PerezNotwithstanding any other laws, section 525 prohibits a governmental unit from denying, revoking, suspending, or refusing to renew a license, permit, charter, franchise, or other similar grant to, from conditioning such a grant to, from discrimination 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 or that is or has been associated with a debtor. The prohibition extends only to discrimination or other action based solely on the basis of the bankruptcy, on the basis of insolvency before or during bankruptcy prior to a determination of discharge, or on the basis of nonpayment of a debt discharged in the bankruptcy case (the situation). It does not prohibit consideration of other factors, such as future financial responsibility or ability, and does not prohibit imposition of requirements such as net capital rules, if applied nondiscriminatorily.

PerezIn addition, the section is not exhaustive. The enumeration of various forms of discrimination against former bankrupts is not intended to permit other forms of discrimination. The courts have been developing the rule. This section permits further development to prohibit actions by governmental or quasi-governmental organizations that perform licensing functions, such as a State bar association or a medical society, or by other organizations that can seriously affect the debtors’ livelihood or fresh start, such as exclusion from a union on the basis of discharge of a debt to the union’s credit union.

PerezThe effect of the section, and of further interpretations of the rule, is to strengthen the anti-reaffirmation policy found in section 524(b). Discrimination based solely on nonpayment could encourage reaffirmations, contrary to the expressed policy.

The section is not so broad as a comparable section proposed by the Bankruptcy Commission, S. 236, 94th Cong., 1st Sess. § 4–508 (1975), which would have extended the prohibition to any discrimination, even by private parties. Nevertheless, it is not limiting either, as noted. The courts will continue to mark the contours of the anti-discrimination provision in pursuit of sound bankruptcy policy.

Editorial Notes

References in Text

act June 10, 1930, ch. 436 46 Stat. 531 section 499a(a) of Title 7The Perishable Agricultural Commodities Act, 1930, referred to in subsec. (a), is , , which is classified generally to chapter 20A (§ 499a et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see and Tables.

act Aug. 15, 1921, ch. 64 42 Stat. 159 section 181 of Title 7The Packers and Stockyards Act, 1921, referred to in subsec. (a), is , , which is classified generally to chapter 9 (§ 181 et seq.) of Title 7. For complete classification of this Act to the Code, see and Tables.

June 30, 1944July 12, 1943section 204 of Title 7Section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending , and for other purposes,” approved , referred to in subsec. (a), is classified to .

act July 1, 1898, ch. 541 30 Stat. 544The Bankruptcy Act, referred to in text, is , , which was classified generally to former Title 11.

Pub. L. 89–329Nov. 8, 196579 Stat. 1219 section 1001 of Title 20The Higher Education Act of 1965, referred to in subsec. (c)(2), is , , . Title IV of the Act is classified generally to subchapter IV (§ 1070 et seq.) of chapter 28 of Title 20, Education. For complete classification of this Act to the Code, see Short Title note set out under and Tables.

Amendments

Pub. L. 116–260, § 1001(c)(2)15 U.S.C. 90562020—Subsec. (d). , struck out subsec. (d) which read as follows: “A person may not be denied relief under sections 4022 through 4024 of the CARES Act (, 9057, 9058) because the person is or has been a debtor under this title.”

Pub. L. 116–260, § 1001(c)(1), added subsec. (d).

Pub. L. 109–8, § 1211(1)2005—Subsec. (c)(1). , inserted “student” before “grant, loan,”.

Pub. L. 109–8, § 1211(2)Subsec. (c)(2). , substituted “any program operated under” for “the program operated under part B, D, or E of”.

Pub. L. 103–394, § 501(d)(15)7 U.S.C. 499a–499s 7 U.S.C. 181–229 57 Stat. 422 7 U.S.C. 204July 12, 19431994—Subsec. (a). , struck out “()” after “Act, 1930”, “()” after “Act, 1921”, and “(; )” after “”.

Pub. L. 103–394, § 313Subsec. (c). , added subsec. (c).

Pub. L. 98–3531984— designated existing provisions as subsec. (a), inserted “the” before “Perishable”, and added subsec. (b).

Statutory Notes and Related Subsidiaries

Effective Date of 2020 Amendment

Pub. L. 116–260, div. FF, title X, § 1001(c)(2)Dec. 27, 2020134 Stat. 3217Dec. 27, 2020, , , provided that the amendment made by section 1001(c)(2) is effective on the date that is 1 year after .

Effective Date of 2005 Amendment

Pub. L. 109–8Apr. 20, 2005section 1501 of Pub. L. 109–8 section 101 of this titleAmendment by effective 180 days after , and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see , set out as a note under .

Effective Date of 1994 Amendment

Pub. L. 103–394Oct. 22, 1994Oct. 22, 1994section 702 of Pub. L. 103–394 section 101 of this titleAmendment by effective , and not applicable with respect to cases commenced under this title before , see , set out as a note under .

Effective Date of 1984 Amendment

Pub. L. 98–353July 10, 1984section 552(a) of Pub. L. 98–353 section 101 of this titleAmendment by effective with respect to cases filed 90 days after , see , set out as a note under .