Chapter 13 bankruptcy allows individuals to reorganize their debts while keeping their assets. If you hold or seek a professional license, it is important to understand how bankruptcy could affect your professional standing. Knowing these potential impacts can help you navigate the process more effectively.
Retaining a professional license
Filing for Chapter 13 bankruptcy will not automatically cause you to lose your professional license. Most licensing boards view bankruptcy as a financial issue, not a reflection of a person’s professional competence or ethics.
Different professions and licensing boards have varying rules that affect how bankruptcy will impact your license. It is important to check with the relevant board to understand their policies regarding bankruptcy to avoid unpleasant surprises.
Obtaining a professional license
For those applying for a new professional license, a Chapter 13 bankruptcy filing may raise questions during the application process. Licensing boards may review the circumstances surrounding the bankruptcy to assess the applicant’s financial responsibility. Under 11 U.S. Code § 525, licensing boards cannot deny, revoke, or refuse to renew a license solely because of the bankruptcy filing.
Some licensing boards might add extra requirements. These could include things like financial counseling or a deeper review of the applicant’s financial history. This may be especially true in fields like law and accounting.
Navigating the process
Navigating the impact of Chapter 13 bankruptcy on professional licensing requires careful consideration. Understanding the rules of the specific licensing board and preparing to address any issues that arise are key to moving forward.
