Texas Professional Licenses: Can Bankruptcy Affect Credentials?

 Posted on September 19, 2025 in Bankruptcy

For many Texans, professional licenses are more than just credentials. A professional license is often the result of years of your work and study, and the foundation of your livelihood. Whether you are a doctor, nurse, lawyer, real estate broker, contractor, or other type of licensed professional, when financial hardship reaches the point of bankruptcy, you may fear that it could cost you your license. Although bankruptcy can relieve overwhelming debt and give you a fresh financial start, it could also have career consequences.

Whether your particular professional license might be impacted by a bankruptcy filing will depend on what type of license you have, the reason for your current financial distress, and how the specific Texas licensing board views bankruptcy. Having an experienced Galveston, TX bankruptcy attorney guiding you through the process and answering your questions can be an invaluable resource during this challenging time.

The Role of Bankruptcy in Professional Life

It is important to remember that bankruptcy is a legal tool that helps people restructure or discharge debts. Further, bankruptcy is rarely the result of chronic overspending. In today’s world, the primary cause of bankruptcy cited by a staggering 66.5 percent of Americans is medical debt. It is estimated that as many as 550,000 people file for bankruptcy each year because of medical debt. Filing for bankruptcy should never imply dishonesty or deception.

The housing market increasingly takes a huge percentage of workers’ paychecks just to have a roof over their heads, and wages have not kept up with the cost of food, utilities, and other necessities. Federal law protects consumers against discrimination solely for filing for bankruptcy, and most Texas boards will not automatically revoke or suspend a professional license as a result of bankruptcy. For example, the Texas State Bar focuses solely on misconduct rather than financial status, unless client funds are an issue.

The Texas Medical Board only considers financial issues if they impact patient care or involve fraud in some way. Bankruptcy may impact character/fitness reviews for doctors and nurses. The Texas State Board of Public Accountancy may require that an individual report his or her bankruptcy. While a history of financial instability might well raise questions, a bankruptcy filing alone cannot result in disciplinary action.

Since real estate professionals often handle trust accounts with client funds, a bankruptcy filing could result in an investigation by the Texas Real Estate Commission to ensure no client funds have been compromised. For licensed contractors, including building contractors, plumbers, electricians, etc., a recent bankruptcy could impact the ability to obtain or maintain a surety bond. Since surety bonds are often a requirement for licensing, a bankruptcy could potentially impact a contractor’s license. Generally speaking, if bankruptcy does not involve the misuse of client trust funds, fraud, or embezzlement, the licensing boards may take no action at all.

Why Bankruptcy Can Mean a Fresh Start

In some instances, filing for bankruptcy can actually protect an individual’s career, since wage garnishments and lawsuits could potentially jeopardize professional standing more than a bankruptcy. In particular, a person who is able to choose Chapter 13 bankruptcy with a three to five-year payment plan might demonstrate responsibility rather than financial irresponsibility. Filing sooner rather than later can prevent judgment liens that can complicate license renewals that require financial disclosure.

Contact a Galveston County, TX Chapter 13 Bankruptcy Lawyer

If you hold a Texas professional license, your career may well be your most valuable asset. It can be beneficial to speak to an experienced Galveston, TX bankruptcy attorney from The Fealy Law Firm, PC who can ensure your bankruptcy – and your professional license – are handled in the most strategic manner. Attorney Fealy fully understands the unique concerns of licensed professionals and is focused on helping good people through hard times. To schedule your free consultation, call 713-526-5220.