Thousands of people file for bankruptcy each year, and it can be a smart financial move to make a fresh start and start rebuilding a stronger financial future. Bankruptcy is becoming increasingly common for licensed professionals who may be burdened by high annual professional fees and/or tuition debt. As an example, medical school costs are at an all-time high with 25% of 2016 graduates carrying over $200,000 in debt. When debt escalates to the point that it is growing significantly faster than it can be paid down, bankruptcy may be a sensible option. But licensed professionals are often hesitant to file for bankruptcy for fear of losing their license. Let’s take a look at what protections are available under federal bankruptcy law for federal and private licensed professionals.
Are you facing tuition debt, growing tax burdens or other debt that you can’t pay off? Contact Sirody & Associates for a free consultation and start rebuilding your financial future. Call (410) 415-0445.
Protection Under The Federal Bankruptcy Code
Nurses, doctors, pharmacists, physicians assistants, dentists and other medical professionals face financial difficulties just like anyone else. The same is true of people holding other professional licenses such as realtors, attorneys or certified public accountants (CPAs). Family emergencies, credit card debt, unpaid tuition expenses and medical bills can easily become overwhelming. What’s important to understand is that under federal law, bankruptcy is a legal right that is available to any debtor who adheres to the legal guidelines. In addition, the bankruptcy code is written so that employers cannot discriminate against employees who have filed for bankruptcy, who have not repaid a bill that was included in the filing or who were insolvent before or during the case. In other words, you cannot be fired or lose your professional license solely due to a bankruptcy filing, financial distress or unpaid bills.
Federal Employment Versus Private Employment
Bankruptcy Code section 525 addresses discrimination against people who are under financial duress and have filed bankruptcy. In addition to protecting an existing job, the code also offers protection for job seekers. The code states that potential federal employers cannot “deny employment” due to bankruptcy. Unfortunately, while private employees are protected against being fired for bankruptcy, no clause for denial of new employment is included in the law for private employees. In other words, private employees can legally deny employment to a job applicant who has filed for bankruptcy. If you work in the private sector, be aware that a credit check conducted in advance of a potential job offer could disqualify you from being hired if you have a past bankruptcy.
Renewing Professional Licenses
Licensed professions require the licensees to adhere to certain standards of character and fitness, but these standards vary from profession to profession. Although by law you cannot be denied a license due to a bankruptcy, it is important to recognize that some license review processes require a background and credit check, which would reveal a past bankruptcy. If you have any concerns whatsoever, consult with an experienced bankruptcy attorney to ensure that your professional license remains protected.
If you are a licensed professional and are considering filing for bankruptcy, contact Sirody & Associates today to get answers. Call (410) 415-0445.