Bankruptcy and Professional Licenses and Employment Discrimination

Many professionals, such as teachers, nurses, real estate brokers, and even funeral home directors are required to obtain a license or certification before they may begin a job in their chosen field. People in licensed professions or people who plan to become licensed often ask if a bankruptcy will affect their license or the ability to obtain a license in the future.  

The short answer is that filing a bankruptcy will not affect a professional license. Rather, the issues or reason for filing bankruptcy could cause a licensing problem. If the bankruptcy was filed because there was fraud, criminal behavior, or this is the second or third bankruptcy, these facts might indicate a lack of trustworthiness and show a poor history of meeting financial obligations. Licensing agencies are typically looking at these types of characteristics or factors when determining moral character or future financial history. 

On the other hand, a bankruptcy on your record may show reliability and trustworthiness. If you think about it, a person that has filed a bankruptcy to deal with their financial issues is a far lower security risk than one that is still hounded by an overwhelming amount of debt.  The person that has taken responsibility and filed a bankruptcy is being responsible and is simply at less risk of being bribed to do something than the one that carries a substantial debt load.  

Under the Bankruptcy Code § 525, a governmental agency such as a state board may not deny, revoke, or suspend a license just because someone filed for bankruptcy. Similarly, an employer may not terminate an employee solely because they filed bankruptcy. An employer may also not discriminate against someone because of bankruptcy. They are not permitted to change an employee’s pay, duties, or deny a promotion.  

It is unlikely filing bankruptcy will have an effect on a professional license. Always check your licensing requirements to determine if you need to report a bankruptcy filing to the licensing agency. It is also substantially unlikely you will find a change of employment from filing  a bankruptcy.  In an economy so heavily reliant on credit and so medically expensive it is only natural that you would need a robust bankruptcy system to keep things moving .  

If you need information on what your options are in bankruptcy or if you have any questions about bankruptcy please contact our office.  One of our bankruptcy attorneys will be happy to go over thing with you and help you determine if bankruptcy is the right option for you.

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