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Your financial planner filed for personal bankruptcy: What next?

You trust your financial planner to have your best interests at heart when it comes to money. Further, most financial planners are thought to be knowledgeable, forthright and even conservative to some measure. What happens, then, when your financial planner files for personal bankruptcy? Today, we discuss whether these professionals will face career sanctions or other consequences after filing for personal bankruptcies because of their own personal financial challenges.

Industry representatives say that a list of Certified Financial Planners who have declared their own personal bankruptcy is published periodically. That list includes the names of those planners who have filed for individual bankruptcy during the past five years. Still, financial planners are not subject to any kind of professional consequences, and the bankruptcies will not be investigated by the Certified Financial Planner Board of Standards.

Currently, only 42 CFP professionals are listed on the bankruptcy log. Although many of these individuals claim that their personal bankruptcies have little effect on their profession - some say they have filed bankruptcy because of unfair divorces, for example - consumer advocates say that the 'publicize' position is only fair for buyers. They say those investors have the right to know whether their adviser has gone through individual financial woes before they decide to purchase their services. Financial planners are often expected to 'walk the talk' by keeping their own finances in line - the same reason that personal trainers, for example, are required to stay fit. Credibility is key in the financial planning profession.

With that said, it is not impossible for a financial planner to continue working after a personal bankruptcy. With the proper legal assistance, any professional can overcome financial challenges and enjoy the debt relief available to Maryland residents. A qualified personal bankruptcy attorney can provide more information about financial options, including Chapter 7 bankruptcy and Chapter 13 bankruptcy provisions.

Source: The Street, "What If Your Financial Planner Files for Bankruptcy?" Hal M. Bundrick, Jan. 15, 2014

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