Who Will Be Informed About My Consumer Proposal/Bankruptcy?

October 16th, 2015 by Wendy O.

Consumer proposals vs 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 Bankruptcy-Canada.ca website, I also learned about Consumer Proposals. At first, I naturally didn’t know which route I would take.

During that uncertain time, one worry kept cropping up in my mind: if I filed for Bankruptcy, or filed a Consumer Proposal, who would find out?

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?

Filing for BankruptcyAh – 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, t