Title 11 — Bankruptcy
Chapter 5 — Creditors, the Debtor, and the Estate
§ 525. Protection against discriminatory treatment
Statutory text
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.
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—
is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
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
has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
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.
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.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Pub. L. 95–598 · 92 Stat. 2549
Enacted · 11 U.S.C. § 525
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2593
Source evidence
Code source credit
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2593Pub. L. 98–353 title III § 309 · 98 Stat. 333
Amended · 11 U.S.C. § 525
Pub. L. 98–353 designated existing provisions as subsec. (a)
Inserted · 11 U.S.C. § 525
Pub. L. 98–353 inserted “the” before “Perishable”
Added · 11 U.S.C. § 525
Pub. L. 98–353 added subsec. (b)
Source evidence
Code amendment note
Pub. L. 98–353 designated existing provisions as subsec. (a), inserted “the” before “Perishable”, and added subsec. (b).Enacted provision · exact public law section
Sec. 309. Section 525 of title 11, United States Code, is amended— (1) by inserting “(a)” before “Except”, (2) by inserting “the” before “Perishable”, and (3) by adding at the end thereof the following new subsection: Employment and unemployment. Discrimination, prohibition. 11 USC note prec. 101. “(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.”.Bankruptcy Reform Act of 1994
Pub. L. 103–394 § 501(d)(15) · 108 Stat. 4106
Struck · 11 U.S.C. § 525(a)
Pub. L. 103–394, § 501(d)(15), struck out “(7 U.S.C. 499a–499s)” after “Act, 1930”, “(7 U.S.C. 181–229)” after “Act, 1921”, and “(57 Stat. 422; 7 U.S.C. 204)” after “July 12, 1943”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 103–394, § 501(d)(15), struck out “(7 U.S.C. 499a–499s)” after “Act, 1930”, “(7 U.S.C. 181–229)” after “Act, 1921”, and “(57 Stat. 422; 7 U.S.C. 204)” after “July 12, 1943”.Enacted provision · exact public law section
(15) in section 525(a)— (A) by striking “(7 U.S.C. 499a–499s)”, (B) by striking “(7 U.S.C. 181–229)”, and (C) by striking “(57 Stat 422; 7 U.S.C. 204)”,Bankruptcy Reform Act of 1994
Pub. L. 103–394 § 313 · 108 Stat. 4106
Added · 11 U.S.C. § 525(c)
Pub. L. 103–394, § 313, added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 103–394, § 313, added subsec. (c).Enacted provision · exact public law section
SEC. 313. PROTECTION AGAINST DISCRIMINATORY TREATMENT OF APPLICATIONS FOR STUDENT LOANS. Section 525 of title 11, United States Code, is amended by adding at the end the following: “(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 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 the program operated under part B, D, or E of title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.”.Pub. L. 109–8 § 1211(1) · 119 Stat. 23
Inserted · 11 U.S.C. § 525(c)(1)
Pub. L. 109–8, § 1211(1), inserted “student” before “grant, loan,”
Source evidence
Code amendment note
Subsec. (c)(1). Pub. L. 109–8, § 1211(1), inserted “student” before “grant, loan,”.Enacted provision · exact public law section
(1) in paragraph (1), by inserting “student” before “grant” the second place it appears; andPub. L. 109–8 § 1211(2) · 119 Stat. 23
Substituted · 11 U.S.C. § 525(c)(2)
Pub. L. 109–8, § 1211(2), substituted “any program operated under” for “the program operated under part B, D, or E of”
Source evidence
Code amendment note
Subsec. (c)(2). Pub. L. 109–8, § 1211(2), substituted “any program operated under” for “the program operated under part B, D, or E of”.Enacted provision · exact public law section
(2) in paragraph (2), by striking “the program operated under part B, D, or E of” and inserting “any program operated under”.Consolidated Appropriations Act, 2021
Pub. L. 116–260 § 1001(c)(2) · 134 Stat. 1182
Struck · 11 U.S.C. § 525(d)
Pub. L. 116–260, § 1001(c)(2), struck out subsec. (d) which read as follows: “A person may not be denied relief under sections 4022 through 4024 of the CARES Act (15 U.S.C. 9056, 9057, 9058) because the person is or has been a debtor under this title.”
Source evidence
Code amendment note
Subsec. (d). Pub. L. 116–260, § 1001(c)(2), struck out subsec. (d) which read as follows: “A person may not be denied relief under sections 4022 through 4024 of the CARES Act (15 U.S.C. 9056, 9057, 9058) because the person is or has been a debtor under this title.”Enacted provision · exact public law section
SEC. 1001. CORONAVIRUS RELIEF FUND EXTENSION. Section 601(d)(3) of the Social Security Act (42 U.S.C. 801(d)(3)) is amended by striking “December 30, 2020” and inserting “December 31, 2021”.Effective date note
Pub. L. 116–260, div. FF, title X, § 1001(c)(2), Dec. 27, 2020, 134 Stat. 3217, provided that the amendment made by section 1001(c)(2) is effective on the date that is 1 year after Dec. 27, 2020.Consolidated Appropriations Act, 2021
Pub. L. 116–260 § 1001(c)(1) · 134 Stat. 1182
Added · 11 U.S.C. § 525(d)
Pub. L. 116–260, § 1001(c)(1), added subsec. (d)
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 116–260, § 1001(c)(1), added subsec. (d).Enacted provision · exact public law section
SEC. 1001. CORONAVIRUS RELIEF FUND EXTENSION. Section 601(d)(3) of the Social Security Act (42 U.S.C. 801(d)(3)) is amended by striking “December 30, 2020” and inserting “December 31, 2021”.Effective date note
Pub. L. 116–260, div. FF, title X, § 1001(c)(2), Dec. 27, 2020, 134 Stat. 3217, provided that the amendment made by section 1001(c)(2) is effective on the date that is 1 year after Dec. 27, 2020.
9 of 10 references resolved to an enrolled provision · 1 partial
Notes
Historical and Revision Notes
senate report no. 95–989
This section is additional debtor protection. It codifies the result of Perez v. Campbell, 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.
Notwithstanding 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 Perez 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.
In 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 Perez 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.
The effect of the section, and of further interpretations of the Perez 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
The Perishable Agricultural Commodities Act, 1930, referred to in subsec. (a), is act June 10, 1930, ch. 436, 46 Stat. 531, which is classified generally to chapter 20A (§ 499a et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 499a(a) of Title 7 and Tables.
The Packers and Stockyards Act, 1921, referred to in subsec. (a), is act Aug. 15, 1921, ch. 64, 42 Stat. 159, which is classified generally to chapter 9 (§ 181 et seq.) of Title 7. For complete classification of this Act to the Code, see section 181 of Title 7 and Tables.
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 , referred to in subsec. (a), is classified to section 204 of Title 7.
The Bankruptcy Act, referred to in text, is act July 1, 1898, ch. 541, 30 Stat. 544, which was classified generally to former Title 11.
The Higher Education Act of 1965, referred to in subsec. (c)(2), is Pub. L. 89–329, , 79 Stat. 1219. 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 section 1001 of Title 20 and Tables.
Amendments1984–2020 · 4 rounds
2020
Subsec. (d). Pub. L. 116–260, § 1001(c)(2), struck out subsec. (d) which read as follows: “A person may not be denied relief under sections 4022 through 4024 of the CARES Act (15 U.S.C. 9056, 9057, 9058) because the person is or has been a debtor under this title.”
Pub. L. 116–260, § 1001(c)(1), added subsec. (d).
2005
Subsec. (c)(1). Pub. L. 109–8, § 1211(1), inserted “student” before “grant, loan,”.
Subsec. (c)(2). Pub. L. 109–8, § 1211(2), substituted “any program operated under” for “the program operated under part B, D, or E of”.
1994
Subsec. (a). Pub. L. 103–394, § 501(d)(15), struck out “(7 U.S.C. 499a–499s)” after “Act, 1930”, “(7 U.S.C. 181–229)” after “Act, 1921”, and “(57 Stat. 422; 7 U.S.C. 204)” after “”.
Subsec. (c). Pub. L. 103–394, § 313, added subsec. (c).
1984
Pub. L. 98–353 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), , 134 Stat. 3217, 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
Amendment by Pub. L. 109–8 effective 180 days after , and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title.
Effective Date of 1994 Amendment
Amendment by Pub. L. 103–394 effective , and not applicable with respect to cases commenced under this title before , see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title.
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after , see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.
Credits
1978–2020 · 5 acts
- 1978Pub. L. 95–598, , 92 Stat. 2593
- 1984Pub. L. 98–353, title III, § 309, , 98 Stat. 354
- 1994Pub. L. 103–394, title III, § 313, title V, § 501(d)(15), , 108 Stat. 4140, 4145
- 2005Pub. L. 109–8, title XII, § 1211, , 119 Stat. 194
- 2020Pub. L. 116–260, div. FF, title X, § 1001(c), , 134 Stat. 3217.
Show as published
(Pub. L. 95–598, , 92 Stat. 2593; Pub. L. 98–353, title III, § 309, , 98 Stat. 354; Pub. L. 103–394, title III, § 313, title V, § 501(d)(15), , 108 Stat. 4140, 4145; Pub. L. 109–8, title XII, § 1211, , 119 Stat. 194; Pub. L. 116–260, div. FF, title X, § 1001(c), , 134 Stat. 3217.)