Will I lose my License If I file Bankruptcy?
The Certified Financial Planner (CFP) Board of Standards announced that, effective September 1, 2012, it will shorten the “experience” requirement. It will also make personal bankruptcy information public.
Specifically, the Board will reduce the length of time needed to become certified with two years of experience, instead of the traditional three. At the same time, it will make personal information public, related to their filing bankruptcy.
That last part is disconcerting at first blush. But remember this: When a person files bankruptcy, it is a public record anyway. The difference is, not many people know where or how to look up that information. As of September, people looking to hire a CFP will have it readily available on a central directory/website.
This is not new or unique. Many governmental licensing agencies already ask for and make bankruptcy information available. For example, the Arizona Registrar of Contractors (ROC) requires a company or an individual to disclose previous bankruptcy filings, and it is on the ROC website. But that does not keep a person from obtaining a contractor’s license. It’s a simple matter of disclosure.
The bottom line: In 25 years and thousands of filings, I have never seen a situation where someone loses a license or a job because of a bankruptcy. Indeed, it is illegal for an employer to fire someone because of a bankruptcy filing. A person who is or wants to be a CFP will be able to do so after receiving a bankruptcy discharge of debt, which provides peace of mind.