How Chapter 7 Could Affect Maryland Professional Licenses

 Posted on December 17, 2025 in General Bankruptcy Topics

When you are in the midst of filing for bankruptcy, how it could affect your professional credentials may be one thing you did not consider. Many licensing boards, especially those for healthcare workers, real estate agents, contractors, and financial professionals, require self-reporting of bankruptcy and may investigate any type of conduct that leads to insolvency.

While filing Chapter 7 bankruptcy can stop wage garnishments and help you get a fresh financial start, you could be shocked and dismayed to receive a notice from your licensing board weeks later demanding documents, financial explanations, or notice of compliance. Even worse, a Chapter 7 filing can delay renewal and trigger disciplinary action.

It is crucial that you fully understand the potential risks to your professional license. A knowledgeable Greenbelt, MD bankruptcy lawyer can help you determine whether bankruptcy will affect your professional license before you file.

Why Chapter 7 Bankruptcy Could Affect Maryland Professional Licenses

While bankruptcy itself is not a violation of professional conduct rules, many Maryland agencies require mandatory self-reporting of bankruptcy, evidence of financial responsibility, and disclosure of malpractice settlements or claims tied to debt. Some licensing boards view financial instability as a potential risk to clients, a threat to fiduciary obligations, or, in some fields, an indicator of poor ethical judgment.

Why Maryland Professional Licenses Are Most Impacted by a Chapter 7 Filing?

The professional licenses that are most likely to be negatively impacted by filing Chapter 7 include:

Healthcare Professionals

Physicians, social workers, CNAs, nurses, and other healthcare workers could be significantly affected by a Chapter 7 filing since the Maryland Board of Nursing and other health boards require reporting events that could affect competence or character. A bankruptcy linked to gambling, substance abuse, or fraud could result in an investigation.

Real Estate Agents and Brokers

The Maryland Commission requires real estate agents and brokers to disclose any financial event that could affect fiduciary trustworthiness, including bankruptcy. Agents who handle escrow funds face increased scrutiny when filing for bankruptcy.

Building Contractors and Trade License Holders

The Maryland Home Improvement Commission (MHIC) and trade boards review all judgments, dissolved LLCs, and unpaid subcontractor or supplier debt allegations, which means a Chapter 7 bankruptcy would likely be reviewed by the board. Chapter 7 bankruptcy could suggest instability or mismanagement of customer funds.

Insurance Agents, Mortgage Loan Originators, and Financial Professionals

Insurance agents, mortgage loan originators, bookkeepers, accountants, and CMAs are required to provide detailed financial disclosure. Any type of bankruptcy is likely to trigger an automatic review status and potential disciplinary actions.

Attorneys and Other Fiduciary-Reliant Professions

While the Maryland State Bar Association does not punish bankruptcy per se, if debt is tied to client fund mismanagement, then the Bar may assume risk. If an attorney files for personal bankruptcy, it can trigger an audit of their client trust accounts to ensure there was no misappropriation of funds.

What Do Licensing Boards Look For Following a Chapter 7 Filing?

The news is not all bad. Licensing boards are aware of the state of our economy and will want to know what caused the bankruptcy. Perhaps there was an unexpected medical hardship, which is a leading cause of bankruptcy. The individual may have lost his or her job, been divorced, or experienced a family emergency.

These things may cause the board to overlook the Chapter 7 filing. On the other hand, tax evasion, misuse of client or business funds, poor financial decision-making, or gambling or addiction-related spending could trigger reviews and further action.

Contact a Greenbelt, MD Chapter 7 Bankruptcy Lawyer

If you hold a Maryland professional license and are considering Chapter 7, you must understand your reporting obligations and potential board review issues before you start. A highly experienced Rockville, MD consumer bankruptcy attorney from The Law Office of Donald L. Bell can help you protect your credentials, prepare compliant disclosures, and avoid unnecessary complications.

Attorney Bell is the chair of the National Bar Association’s Bankruptcy section and offers hands-on guidance with more than 20 years of experience. Call 301-614-0535 to schedule your free consumer bankruptcy case consultation. (Businesses require a consultation fee.)