A significant factor when considering bankruptcy is whether it will affect your current employment or obstruct you from finding a new job.
In this guide, we examine whether you can file bankruptcy if you have a job, how wages are treated and whether you can manage a business.
Can I file bankruptcy if I have a job?
You do not have to inform your employer about your bankruptcy, and your employer isn’t notified. If you’re having their wages garnished, your Licensed Insolvency Trustee must contact your employer to have it lifted.
While your employer cannot fire you if you go bankrupt, some sectors require employees to disclose financial difficulties. These include the finance and insurance industries, where potential blackmail could be a threat.
Jobs that rely on professional credentials or licenses (e.g. insurance brokers, chartered professional accountants, solicitors, etc.) may also face restrictions. A consumer proposal has fewer restrictions.
Before you file, check with your professional board or body.
Can you be bonded during bankruptcy?
If you need to be bonded for your job, the bonding company will want to know what caused your bankruptcy to ensure you are not a risk.
This process is more straightforward once you are discharged from bankruptcy. If you need to be bonded, consider filing a consumer proposal instead.
Ask a Licensed Insolvency Trustee if you are unsure.
Can you get a new job if I file for bankruptcy?
Bankruptcy typically doesn’t impact your ability to get a new job, but an employer may ask you if you are bankrupt.
Some industries may also run a credit check or request your credit report before making a formal offer of employment. This is particularly common in the financial sector.
Can I be a company director while bankrupt?
In most provinces, you cannot be a company director during your bankruptcy and must resign. Once you’re discharged from bankruptcy, you can be a director again. If you want to remain a director and continue to manage your business, consider filing a consumer proposal instead.
A consumer proposal is not the same as bankruptcy. You offer to repay what you can afford rather than the total amount, with the remaining balance forgiven by your creditors.
By entering into this formal agreement, you can keep your assets and continue to control your business.
If you are a shareholder in a company, your shares will form part of your bankruptcy estate. These shares are sold by your trustee and distributed to your creditors.
If the shares are of no value, they are usually returned to you at the end of your bankruptcy.
Are wages protected in bankruptcy?
You will not lose your wages in bankruptcy, but you must provide evidence of your income and expenses each month to determine if you have earned more than the income threshold set by the government.
Anyone earning more than the threshold will make surplus income payments to their creditors during bankruptcy.
Is there another way that doesn’t affect employment?
Many choose a consumer proposal as a less drastic solution to their debts. It can alleviate most issues affecting your employment, and you can still be the director of a company.
Always check with your professional board or body to determine what happens if you enter into bankruptcy or a consumer proposal.
In most cases, bankruptcy won’t affect your employment, but some industries require you to disclose this information. Always check with your professional board or body.
If you are still unsure, you can talk to a Licensed Insolvency Trustee for free.
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