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Who Will Be Informed About My Consumer Proposal/Bankruptcy?

In 2009, when I realized I could no longer maintain my bill payments, many things went through my head. I thought I might be heading for Bankruptcy. Then, via the website, I also learned about Consumer Proposals. At first, I naturally didn’t know which route I would take.

Back in the old days, many of us saw ads in the Legal Notices section of the local newspaper, informing of the bankruptcy of local individuals or companies. “Does that still happen?” I wondered.

Also, was there any reason my employer would learn of it? And what about the future – could anyone doing research on me find out about my CP or Bankruptcy?

Gradually, through my Trustee and this website, I found the answers to these questions.  First – these days, those legal notices in the newspaper are only used in the case of individuals or companies with very substantial assets. Their purpose is to provide the Trustee’s contact information for anyone with claim to make. Notices still sometimes appear in national newspapers when a large business files for Bankruptcy. But if you are just an average individual contemplating Bankruptcy or Consumer Proposal – don’t worry, there will be no “Public Notice.”

All of your current creditors, of course, will receive paperwork about your Consumer Proposal or Bankruptcy. This includes secured creditors, such as the financial institution that holds your mortgage. Although secured creditors are not usually included in Consumer Proposals, they will still receive paperwork when you file. New potential creditors who check your credit bureau records will also learn of your Bankruptcy or Consumer Proposal for a five years after Bankruptcy discharge or three years after Consumer Proposal completion.

Will your employer know?

Only in very special circumstances. If your employer is one of your creditors, they will naturally be informed. If you work in the finance industry and your terms of employment state you can’t hold your position while insolvent, you will need to tell your employer (if in doubt, check with your Human Resources department). Otherwise, your employer will not be informed of your Bankruptcy or CP.

Will your family know?

Unless members of your family are listed as your creditors, they will only know if you tell them.

Will your spouse know?

Ah – this can get tricky. It’s to be hoped that you can open up to your spouse regarding your financial challenges, but if not, here’s the deal. Although your spouse will not need to file CP or Bankruptcy just because you do, your Trustee needs to know the whole household’s income to calculate your ability to make payments. You will likely need to ask your spouse for his or her income figures. If the spouse will not provide the information, there are ways for the Trustee to calculate around it … but it’s difficult to get through the whole process without discussing it with a spouse. A Trustee can advise further on your specific situation.

What about the future?

If you become a big star, will any journalist be able to “dig up” information about your CP or Bankruptcy? The answer is yes – it is a matter of public record. But it’s not just slapped on a billboard somewhere online where everyone can see it. Instead, if someone in your future wants this information (are you really going to hit it big?) they can visit Industry Canada’s website and search for your name in the Bankruptcy Insolvency Records. Users must log in and pay a minimum of $8 for each name searched.

You may occasionally be asked if you have ever been Bankrupt – usually on credit applications or certain job applications. If you have been Bankrupt, you will have to answer yes, even after discharge. If you have filed a Consumer Proposal, the answer is no.

In my own case, I felt embarrassed about my own CP at first, and it bothered me that there would always be a public record. But gradually my attitude changed. I had already told my spouse. And then, over time, I told my friends and family. No one shunned me! Instead, I found out that many people close to me had experienced similar financial issues. I’ve told co-workers about it, especially when they’ve shared their own financial worries.

So, if I should someday become famous, no one can embarrass me about my Consumer Proposal – everyone already knows! But, if you wish to remain “private,” take comfort in the fact that few people will know unless you tell them.