If you’re planning on filing for bankruptcy, you’ve got a lot on your mind. Worrying about job loss shouldn’t be adding to your list of concerns.
One of the most common questions people have when they first contact us is, “Will I lose my job if I file for Bankruptcy?”. Another common concern is whether their employer will find out.
Here are some definitive answers to these and other common questions about bankruptcy and employment.
If I File, Will My Employer Find Out?
Filing for personal bankruptcy is a private matter. It’s nobody’s business but your own. You may choose to get help resolving your debt and hire a professional. Your relationship with that professional, however, is comparable to the relationship you have with a lawyer or a doctor. Your privacy is protected.
As far as your employer is concerned, there’s no legal entitlement to that sort of personal information. When you file as part of the typical bankruptcy process in Canada, your employer is not notified.
There are a few scenarios where your employer would be notified. However, these are special, relatively rare cases that do not affect most filings.
But Aren’t Bankruptcy Filings on Public Record?
Yes, that is true. Anyone may go and search public records for bankruptcy filing notices. Chances are, however, that your secret is still safe. Your employer, unless you’ve given them a reason to, isn’t taking time out of their busy schedule to search public records. There are two more obstacles, too: they’d have to register and pay.
Secondly, you may have even heard of legal notices about bankruptcy being published in newspapers. Although some papers may still do this, it’s a practice that’s fading fast. And even if they were still published, who reads them unless they’ve been given a reason to? So unless you’ve told someone about your personal financial situation, there’s only a very slim chance they’ll find out. Most people you know won’t be scanning the local newspaper for the announcement of your bankruptcy filing or searching government records online. The same applies to your employer. Who has time?
Will I Lose My Job if I File for Bankruptcy?
Absolutely not. Canadian law states that you cannot get fired from your job for merely filing for personal bankruptcy. It’s illegal, and it puts your employer at significant risk of a lawsuit.
The only exception – and it’s still not a “firing” – is when someone works in the financial industry. Careers like investment broker, accountant, insurance broker, and even sometimes an attorney often must disclose things about their personal finances. Being bankrupt is one of those things. The reason is that it is a direct reflection of their money management skills.
Professionals who handle other people’s money are a different matter. They may find that if they go bankrupt, their jobs may change for a while. Their employer can’t legally fire them, but they give them lighter duty in a different department of the firm for a while.
Some people in this situation opt for filing a consumer proposal. That way, they avoid bankruptcy because they have entered into a repayment arrangement.
Will Filing for Bankruptcy Affect My Getting a New Job?
Typically, you will not be required to disclose your personal bankruptcy filing. Be warned, however, that some employers do ask about them. You may find a question about bankruptcy on their application.
Also, if you are applying for a job where it’s mandatory that you are bonded, you will face obstacles. Companies bond new employees for insurance reasons. Bankruptcy may be a problem with the insurance company issuing the bonds. It’s challenging to pass the bonding process when you have an undischarged bankruptcy. Therefore, employers may opt to rule you out for the position.
I’m Concerned About Bankruptcy’s Effects on My Career. Is There Another Way to Handle My Debt?
Although most people can rest assured that their bankruptcy won’t affect their jobs, some should be concerned. A select few will face the obstacles mentioned above. In addition to the financial professionals and job seekers, people who are seeking jobs in incorporated companies will face obstacles. Some may be insurmountable.
An alternative is to consider a consumer proposal. It too is a legal process, but the difference is that you won’t be in bankruptcy.
For More In-Depth Coverage of Your Questions…
Job loss is certainly something that everyone worries about. But when you’re in debt, there’s an extra level of stress that comes with a loss of income. We hope these answers have helped alleviate some of that stress. We also hope that we’ve provided you with the information that you need.
If you still have questions, you may want to consider speaking with a Licensed Insolvency Trustee (LIT). They can provide advice and resources to help you deal with a bankruptcy on your own terms so you can move forward with confidence. For a free consultation, call us at 519-310-JOHN.