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Can a bankruptcy cost you your professional license?

On Behalf of | Jan 31, 2018 | Receiving And Maintaining Professional Licenses |

Professional people run into financial problems just like anybody else — but unlike the average worker, some professional people have to worry about how a bankruptcy can affect their ability to ply their trade.

If you have a professional license of any kind — or hope to get one — here is what you should know about the effects of bankruptcy.

1. You have a right to file for bankruptcy protection

Under the law, bankruptcy is a legal right for every debtor that meets the rules. As such, the bankruptcy code is written to ensure that private employers are not allowed to discriminate against anyone who:

  • Files a bankruptcy
  • Was insolvent before he or she filed bankruptcy
  • Hasn’t repaid a bill that’s included in the bankruptcy filing

Officially, that means you cannot be fired solely for filing a bankruptcy claim. Nor can your professional license be denied or taken away based on your unpaid bills, financial distress or the bankruptcy itself.

2. You may encounter increased professional scrutiny

Depending on your profession, you can probably still expect increased scrutiny when it comes time for the professional licensing association for your field to review your application for a license or a renewal.

While your right to file bankruptcy is protected, that doesn’t mean that it will erase all prejudices or preconceived notions that people carry. If your profession involves handling other people’s money, like an attorney or realtor might, your application may be picked through carefully for signs of whether or not your personal financial problems are reflective of another, more serious issue.

3. Your best defense is total transparency

You’re more likely to be denied or lose your professional license due to a lack of total transparency than the bankruptcy itself.

The best way to avoid a problem is to be entirely honest about your past financial troubles. Trying to hide the nature of your financial woes is likely to be perceived as a lack of integrity or plain dishonesty — and that will absolutely cost your license.

If you’re concerned about your ability to receive or maintain your professional license because of your past financial mistakes, consider seeking legal advice in advance. An unbiased viewpoint can help you see what mistakes you need to avoid as you move forward with the application.

Source: FindLaw, “11 U.S.C. § 525 – U.S. Code – Unannotated Title 11. Bankruptcy § 525. Protection against discriminatory treatment,” accessed Jan. 31, 2018


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