Will Anyone Know If I Declare Bankruptcy?

In our role as Licensed Insolvency Trustees, we meet with lots of people. More than you might think. On several occasions, a comment has been made about how difficult it was to reach out to us. The reason?

“I did not want anyone to know.”

This is a very natural feeling. It can be difficult to discuss your finances with your spouse let alone reveal them to someone else. A fear exists that all of a sudden everyone will know about your debts. That leads to the question: Will anyone know if I declare bankruptcy?

Initial Consultation

At Chase & Associates, we offer a free, confidential initial consultation where we will go over your debts, assets, income, and family situation. We will then guide you step by step through a variety of options to consider that may help you get on track with your finances.

This process is free and confidential and can be done in person, online, or via phone. The only people who will know about this will be yourself and the trustee who meets with you.

As an independent firm, we have the freedom to take as much time as you need in order to answer your questions. We will ensure that you are comfortable that the option you have chosen is right for you.

Only Those Who Need to Know

If you decide to proceed with declaring bankruptcy in BC, there are certain people who need to know about it. Once you sign your bankruptcy documents, we will register them with the Federal Government. As such, the government will know about it. At that point, other people will be notified such as:

1. Your creditors – we are required to notify them within 5 days. In practice, this happens much faster, usually via email.
2. Canada Revenue Agency – this is necessary because we are required to file your tax return.
3. Collection Agencies – these companies are notified so that they will stop calling you. They are required to stop by law.
4. Credit Bureaus – the two main credit bureaus in Canada are Equifax and TransUnion. They obtain information from the Federal Government on a regular basis. Therefore, after the bankruptcy is registered, the credit bureaus will soon pick up that information. A bankruptcy will stay on your credit history for a minimum of six years after you receive a discharge. If it is your second bankruptcy, then the timeline is extended.
5. Your employer does not need to be notified. The exception to this is if there is a garnish on your wages. In that case, we have found it best to notify them in order to speed up the removal of the garnish so you can get your full pay.

What Information Is Public?

There are three avenues of information that are available to the public. However, most of which are not readily available. These would include the following:

• Government records – The Office of the Superintendent of Bankruptcy is the arm of the Federal Government that maintains the public records of bankruptcy filings. Anyone can search their records to see if a bankruptcy was filed. However, there is a fee to do the search, which is a deterrent. In addition, the record does not disclose much. Only the date the bankruptcy started, the total amount of debts and assets, and who is the trustee.
• Court records – Anything done at the Court is also a public record. Again, this requires some searching. The vast majority of bankruptcy filings do not require any Court time so it is unlikely your information will be available.
• Publication in a newspaper – This is a requirement in larger, more complex bankruptcies where there are significant assets that must be handled by the trustee or if it is the bankruptcy of an incorporated company. Again, in the majority of cases, there is no publication in the newspaper.

Bankruptcy Stigma Is Gone

At one point, bankruptcy had a social stigma. Not so much anymore. Nowadays, it is viewed more as a strategic financial move to improve your finances. We often like to view it as just one tool in a toolbox of financial tools. Sometimes it is the most appropriate tool to use as it can be the fastest, least expensive way to reset your finances.

You might be surprised to find out that some of today’s business moguls have used the bankruptcy process in the past. This is a direct result of the risk/reward capitalist system that we live in. If there was no way to start fresh, it would be much more difficult to take a risk.

Sometimes, avoiding bankruptcy might not be your best choice, as other options can require you to make payments for multiple years.

Bankruptcy should be a strategic decision rather than a stigma. This podcast sheds light on this topic.

More Common Than You Think

Each year, thousands of Canadians across the country declare bankruptcy. For the large majority of cases, the general public does not know about it and life goes on, albeit with a lot less stress. The fact of the matter is, unless you are a public figure like a hockey player or other celebrity, it is very unlikely that anyone will find out. The fact that it is on your credit history for a period of time does not mean you cannot get new credit. Ultimately, that decision is up to each bank, company, or person where you apply. In our experience, if you have a reasonable monthly cash flow, you will be able to find credit.

Talk to Us – We Are Here to Help

You need good information to make good decisions. In order to get the best information, there is a certain amount of disclosure required on your part. We can then comment on how filing bankruptcy will have on you and your finances. Take advantage of our free, confidential assessment to get the information that you need. Once you decide to contact us you are more than halfway there to a debt-free, and brighter financial future.