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How does debt impact moral character determination?

Some people run into financial difficulties. You may have experienced periods of debt and had problems paying your bills. Many employers see these circumstances as understandable when they hire workers. But you might wonder if the State Bar of California will judge you more harshly because you were in debt. 

The state bar looks at different circumstances to determine if you have the right moral character to practice law in California. The good news is that being in debt is not an automatic disqualifier. The state bar will look at the circumstances surrounding your debt to judge your character. 

Going through bankruptcy

The financial burden of debt may have caused you to file for bankruptcy at some point. You could have used it to save your business from debt, used personal bankruptcy to pay off some of your creditors, or liquidated your assets through Chapter 7. If you have made legitimate use of bankruptcy to regain financial solvency, the state bar should not hold your bankruptcy against you. 

Reckless actions with debt

It is possible the bar will have concerns about your moral character if your debt was the result of reckless financial actions like undisciplined spending behavior or poor judgment with investments. Misusing bankruptcy may also cause problems. Some people use the bankruptcy process to defraud creditors. You might have to offer a defense if the bar suspects you of bankruptcy fraud. 

Prior breaches of fiduciary duty

The state bar may also have issues if you have previously breached your fiduciary duty to a client since the bar deems such individuals to have poor moral character. This does not completely foreclose your chances of approval, though. You might have produced a record of exemplary behavior since then, one free of blemishes that shows clients can trust you. This may be difficult to achieve, but it is possible. 

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