Sole prioprietorship and disclosure

October 26th, 2011 by Questions

Due to being over my head with unfiled taxes, student loans, and credit card debts, I’ve talked to a Licensed Insolvency Trustee who has reviewed my options and suggested that personal bankruptcy could be my best option.

The problem is that I’m self-employed. The trustee pointed out that if I operate as a sole proprietorship I am obligated to disclose to clients/customers that I am an undischarged bankrupt. I have no doubt that that will have a negative effect on my ability to make a living. The trustee suggested incorporating a business with someone else as the director (since I can’t while in bankruptcy), but I’m very hesitant to involve someone else in my mess.

Is there any clever, legal way to operate as a sole proprietor and not tell my clients?

Posted from: Alberta

Questions

One Response to “Sole prioprietorship and disclosure”


, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:

I believe you called my office and we spoke about this, but unfortunately there isn’t any clever legal way to operate and not tell your clients. Section 199 of the Bankruptcy and Insolvency Act reads that it is a bankruptcy offence if an undischarged bankrupt fails to disclose the fact of being undischarged “to all persons with whom the undischarged bankrupt enters into any business transactions.”

So it is very clear that proper disclosure must be made. The only way to avoid this is to potentially file a consumer proposal and thereby avoid this problem entirely.

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