Common Bankruptcy-Related Questions Answered
If you’re considering bankruptcy, it’s common to feel nervous about how this financial decision will affect your future. With many Canadians facing job uncertainty right now, you may be asking, “Will I lose my job if I declare bankruptcy?”
As a Licensed Insolvency Trustee, we are often asked this question. We want to explain some of the most pressing concerns surrounding how bankruptcy can impact your current employment and any future job opportunities. By having a clear picture of how your life will be affected by this decision, you can feel ready to move forward with a new financial plan.
Will I lose my job if I file for bankruptcy?
In Canada, you are legally protected from being fired from your job because you file for bankruptcy. Your employer does not have the power to terminate your employment because of your personal financial situation. Your job responsibilities may change, however.
Employers in industries such as insurance and finance often have a standard of conduct that includes disclosing a bankruptcy. If you handle money as part of your profession, your employer may limit your job duties until your bankruptcy is discharged. We recommend contacting human resources at your workplace to learn how a bankruptcy filing could impact your employment.
In this situation, our Licensed Insolvency Trustee can work with you to determine if a consumer proposal may be a better option for you.
Will my employer be notified about my bankruptcy status?
Likely, your employer will not even be aware that you filed for bankruptcy. During a typical insolvency process, a Licensed Insolvency Trustee will not contact your employer about your bankruptcy status.
If your wages are currently being garnished by a creditor, your Licensed Insolvency Trustee will need to contact your employer. In most cases, filing for personal bankruptcy or a consumer proposal will stop a wage garnishment. Your Licensed Insolvency Trustee will contact your employer’s payroll representative to prevent any future deductions from your wages.
How will bankruptcy affect my future employment opportunities?
For many of our clients, their ability to secure employment is not affected after filing for bankruptcy. Generally, employers are not concerned with their employees’ financial situations or how much personal debt they owe.
In some instances, employers will request a credit check as part of their hiring application. This screening process may be required in positions that involve significant financial responsibilities, such as managing investments. Similarly, an employer may require you to be bonded, which is their insurance against theft or damage caused by employees. Until your bankruptcy is discharged, you could experience challenges in obtaining employment that involve these requirements. Once again, a consumer proposal may be a better option because you do not technically declare bankruptcy, potentially making it easier to be bonded.
If you’re feeling overwhelmed with questions about your financial situation, we can help. Our Licensed Insolvency Trustee can work with you to find the best debt relief solutions for your unique situation, such as a consumer proposal or personal bankruptcy. Contact us today to schedule a free consultation.