will filing bankruptcy or a consumer proposal affect my current job or future employment

Will Filing Bankruptcy or a Consumer Proposal Affect My Current Job or Future Employment?

There is no doubt that it can be difficult to talk to someone about your finances. It can be difficult to take that first step. For many people it is a private matter that they would rather not share. Worse yet, what if your employer found out. What would happen? Let’s take a closer look at the question: Will filing Bankruptcy or a Consumer Proposal affect my current job or future employment?

Who Will Know?

Filing Bankruptcy or a Consumer Proposal is a legal process that uses powerful Federal Government of Canada laws to get you protection from your creditors and obtain a fresh start with your finances. In either case, some people do need to know about it. Those people or organizations would include:

  • Your creditors. They must be notified so they will stop collecting
  • The Federal Government
  • Your Licensed Insolvency Trustee (LIT)

That’s it. In the majority of cases no one else will know.

Your employer is generally not notified and would have no reason to know. As with many financial matters there can be exceptions. For instance, if your wages were garnished by a creditor then your LIT would contact your employer during the process of getting the garnish stopped.

The most important point is that it is illegal to lose your job due to a Bankruptcy filing or a Consumer Proposal. However, it can affect you if you have a professional designation.

Can I Be Fired?

It is illegal in Canada for an employer to fire someone because they have filed a Bankruptcy or a Consumer Proposal. However certain professions have professional conduct standards that require someone to disclose if they are bankrupt.

Although most people or employers will not know about a Bankruptcy filing or a Consumer Proposal filing there are some people or organizations that should know. We recommend that you preemptively reach out to your professional association if you are considering obtaining Bankruptcy protection and have a professional designation such as:

  • Accountant
  • Lawyer
  • Real Estate Agent
  • Insurance broker
  • Investment advisor

Many concerns regarding the impact of a Bankruptcy on your employment do not apply in the case of a Consumer Proposal. In our experience most individuals that hold a professional designation will file a Consumer Proposal as an alternative to a Bankruptcy Proceeding, which typically allows them to maintain their employment while still providing a method of obtaining relief from their debts.

One of the many myths about Bankruptcy is that your employer will find out and that it will affect your job now or in the future. This podcast addresses the question: Can Bankruptcy affect my job?

Who Can Find Out About It?

The Federal Government maintains a record of all insolvency filings in Canada. While technically it is a public record, it is not so easy for the average person to find. Someone would have to perform an insolvency search on the government site and pay to see the results. This process discourages people from searching.

Another possible way to find out is if there is a credit check done by a future lender. Credit bureaus such as Equifax and TransUnion are able to obtain the insolvency records from the Federal Government and display them on your credit history for a prescribed period of time. Afterwards, they are scheduled to fall off of your history automatically.

Can I Be Bonded?

This is a situation where your employer has insurance in the event that the employee disappears with funds. The “bond” would repay the employer.

The answer involves what stage of the insolvency process you are in. If you are currently in the middle of a Bankruptcy or a Consumer Proposal it will likely be difficult to qualify for a bond.

If you have completed your insolvency process and obtained your Certificate of Discharge or Certificate of Full Performance of Proposal then a bond should be possible.

Can I Be a Director of a Corporation?

In the province of BC, the BC Companies Act requires that the director of a company not be in the status of Bankruptcy. However, unlike in a Bankruptcy, a Consumer Proposal filing will allow you to maintain your role as a director.

What About Future Employment?

Let’s say that you chose Bankruptcy protection to help reorganize your finances and get a fresh start. Fast forward to the future and you are considering changing careers. Part of that process might be pre employment screening that looks at your financial history.

This can be an issue if you are applying for a position that handles money or other types of financial transactions. We would recommend that you be honest and disclose what happened at that point in your life. We believe that most employers are understanding and the disclosure may even improve their level of trust in you.

For the majority of jobs, such disclosure will not be an issue. Especially, in today’s labor market where there seems to be an abundance of openings.

Contact Us – We are Here to Help!

Too much debt can create all kinds of problems; from financial, to emotional, to relationships.

At Chase & Associates, we offer a free initial assessment where we will analyze your finances and provide you with information on what options are available to you. This appointment is confidential and non judgemental.

Filing a Consumer Proposal or a Bankruptcy in Canada is designed to provide the honest unfortunate person a fresh financial start. Is this you? Reach out to one of our convenient offices and start your journey to a new financial life. You will be glad you did!

Derek L. Chase, CPA, CA, LIT

Being able to offer debt help assistance to individuals and corporations on a more intimate basis was a driving force in completing a “second CPA” by becoming licensed by the Federal Government as a Licensed Insolvency Trustee (previously Trustee in Bankruptcy) in 1997. It is extremely satisfying to be able to witness lives change for the positive due to a restructuring of financial affairs.