State license while in a chap 13

[sockmonkey]

Coming across this late, but... if you have a professional license in any state, check your board's rules closely. Some are beginning to adopt rules pertaining to student loan defaults - you default, you may not get your professional license renewed.

I wonder if federal funding to state institutions of higher learning are driving this increase in a state's decision to go along with this.

[karm43]

Sorry to hear that. Thats terrible. This is actually about the status of my student loan like I said I have to wait and see but I think I have to pay it or lose my license. If I lose my license I lose my lively hood I will lose everything. I am sure the courts will not let that happen....

[Flamingo]

They may have given that as the "Reason" but it is highly unlikely it was the "sole" reason. Bankruptcy is a "factor" but it is rarely the "deciding" factor. In any event, the thing is, when a person is facing BK, it is not as if they have a "real" choice. If you have too much and can't pay it, at some point, you will need to do something. So, the perceived "employment stigma" of bankruptcy is a red herring because there isn't really an alternative to not filing.

We were in Chapter 13 when he renewal came up - specifically indicated to us in writing his clearance would not be renewed due to our filing. He was hoping to keep it as it would have kept some employment doors open for him but he was forewarned ahead of time it would not be renewed due to filing BK. He obtained the clearance in 1996 so it's not like he had it a short time....we filed early 2002.

[karm43]

Do you know anywhere to find that info so I could get a copy, is that in any bk manual or something?

[karm43]

Thats what I was asking so I am gonna further pursue this and see if thats what I have to do.

[HHM]

Side Note

Specifically with student loans, the fact that a debtor would lose their license if they stopped paying the student loans, has been accepted by courts as a reason to separately classify student loans in chapter 13 bankruptcy and actually pay the student loans during the chapter 13.

[karm43]

Its not the bankruptsy that im worried about its the word default on my loan if it says deferment i should be ok. If you do not pay the loan you cannot renew your license. I had gotten 2 months behind 1 time and they threatned to take my license. I do not have any of the original paper work on my loan and I had financed all the small student loans into 1. Guess I should just wait and see. I asked my attorney he like its in your chap 13 well ya i know that but don't think he gets what I'm saying. Thanks

[HHM]

They would not renew my hubby's federal/government clearance after we filed our Chapter 13....Specific reason cited was the bankruptcy.

They may have given that as the "Reason" but it is highly unlikely it was the "sole" reason. Bankruptcy is a "factor" but it is rarely the "deciding" factor. In any event, the thing is, when a person is facing BK, it is not as if they have a "real" choice. If you have too much and can't pay it, at some point, you will need to do something. So, the perceived "employment stigma" of bankruptcy is a red herring because there isn't really an alternative to not filing.

[KeithDoxen]

Neither my Ch 7 nor my default on my private student loans, which are still "in collection" according to my credit report, has impacted my standing with my State Bar. I got my law license back when I still had decent credit and nothing has happened to threaten my license due to the credit issues. I would however have difficulty obtaining a new law license in a different state, depending on the state. I know some states now include with their bar application a line-by-line list of all debts that you owe, and ask you to include whether the debt is in good standing, date of last payment, etc. So the issue of bad debt is becoming a "character and fitness" issue for some state licenses.

[justbroke]

They would not renew my hubby's federal/government clearance after we filed our Chapter 13....Specific reason cited was the bankruptcy.

I'm hoping that doesn't happen to me, but my (first) clearance dates back in the 1980s. I don't know if that was a factor.

You're right. We just never know what can happen and whether any investigative agency will find a bankruptcy to be enough evidence to deny a security clearance.

[8forme]

They would not renew my hubby's federal/government clearance after we filed our Chapter 13....Specific reason cited was the bankruptcy.

My hubby has to have a security clearance for his job. He was very proactive with his FSO when we filed CH13 last Sept. The FBI did a re-investigation, about 6 hours worth, and asked tons of questions about what led to our BK. They also went over all our BK papers, every line on his credit report and wanted more personal references but that was all that was said. I think it helped that he has a very good relationship with the CEO of his company (hubby is one of the executives) and also some of the top people in a certain govt agency and several said they could be his "sponsor", I am not sure that is the correct word. His clearance also goes back over 17 years so it was not a newer one. Also, most of our debt was from serious water damage, drainage issues at our house and the damage to the house structure and foundation that had to be repaired that was not covered by insurance. Then that started a rob peter to pay paul kind of thing. We finally said enough was enough and filed.

Our attorney's office has an attorney that used to be JAG and he will represent any of their clients if a revocation happens, he specializes in security clearances. This is one of the reasons we picked our particular attorney's office. He said it is not too common for it to happen nowadays, but it certainly did happen more a few years ago.

[Flamingo]

What HHM writes is certainly an arguable position for an employer looking at your BK. You don't owe anything. You are less likely to take a bribe... like the person who is chock-full of debt and looking for "extra" income. I received a clearance with a law enforcement agency and a federal agency after having disclosed my bankruptcy! I'm less likely to take a bribe since I only owe about $22K total.

They would not renew my hubby's federal/government clearance after we filed our Chapter 13....Specific reason cited was the bankruptcy.

[justbroke]

What HHM writes is certainly an arguable position for an employer looking at your BK. You don't owe anything. You are less likely to take a bribe... like the person who is chock-full of debt and looking for "extra" income. I received a clearance with a law enforcement agency and a federal agency after having disclosed my bankruptcy! I'm less likely to take a bribe since I only owe about $22K total.

[HHM]

No, this is relative to doing nothing vs. filing BK

Do nothing - too much debt, not enough income and go into default
File BK - solve the problem and now owe nothing.

Based on the circumstances, filing BK puts the person in the strongest possible position relative to employment.

[mountanddo]

For most things, licenses, etc, the BK will have no affect. What is worse, really, owing a bunch of debt you can't pay and going into default, or filing BK to "solve" the debt problem and no owing anyone any money...who is really worse from an employers perspective.

I'm not sure I am reading this correctly. Are you saying that employers look at people in chapter 13's and chapter 7's differently. It sounds like from an employers perspective a chapter 7 is worse?