If you’re facing the possibility of filing for bankruptcy or a consumer proposal, you may be concerned about privacy. Who will find out? Will the neighbours know? Your boss? Or (perish the thought!) your in-laws? Well, we have encouraging news for you.
In most bankruptcies and consumer proposals, the only people in your personal circle who will know will be the ones you choose to tell unless they are creditors of you. While bankruptcies are a matter of public record, they’re not advertised via newspaper announcement unless your free assets (assets less secured liabilities) exceed $15,000.
So who exactly will know? Here’s a list of those that must be notified:
- The government: Your trustee will file your bankruptcy or consumer proposal with the Office of the Superintendent of Bankruptcy (OSB), the federal agency responsible for administering bankruptcy law. These are the records that are public, and anyone (yes, including your in-laws) can pay a fee to run a check on your name.
- Your creditors: Once your trustee has filed the necessary paperwork for a bankruptcy or consumer proposal with the OSB, he/she will have to notify all your creditors as well. In a bankruptcy, this will include any friends/relatives that you have listed as creditors.
- The credit bureaus: Equifax and Transunion are the two credit bureaus that provide reporting to creditors. They will retain a record of your bankruptcy for six to seven years after your discharge; a consumer proposal will remain on their files for three years after you have completed it. During those periods, these records will be shared with any potential lenders who ask for a credit check on you.
- Potential creditors: If you apply for credit of more than $1,000 while you are an undischarged bankrupt, you must, by law, advise a potential creditor that you are bankrupt. This includes credit card holders, banks, payday lenders, and retail creditors such as furniture and computer stores.
Unless your wages have been garnisheed and your trustee needs to stop the garnishment, your employer won’t need to know about either a bankruptcy or a consumer proposal. Some professional associations place restrictions on individuals filing for bankruptcy or making a proposal. You should check with your professional association on this. If you work in a job which requires security banking, a bankruptcy or proposal may affect your ability to be bonded and potentially your employment. The Bankruptcy and Insolvency Act specifically prohibits any employer from firing an individual solely based upon filing for bankruptcy or making a proposal.
For more information on how you might be affected by a consumer proposal or bankruptcy, call today for your free, no-obligation consultation: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online now.