can bankruptcy affect my job

Recent studies have found that most Canadians’ pay raises haven’t matched the increase in the cost of living. As a result, personal Bankruptcies across Canada are spiking. 

But what happens to my job if I file for Bankruptcy? Will my employer find out and is there a possibility that I may lose my job? 

These are relevant questions that most people worry about when they are searching for debt relief options. Licensed Insolvency Trustee, Derek Chase answers these questions and dispels some of the myths around Bankruptcy. 

Derek also discusses:

  • Who actually will know that you have filed for Bankruptcy
  • When your employer may find out
  • How and when your Bankruptcy may affect your future employment
  • The importance of following through and receiving a discharge
  • Why a Consumer Proposal may be a better choice 

Licensed Insolvency Trustees are the only debt professionals licensed to administer Bankruptcies and Consumer Proposals. These two insolvency procedures are designed to help honest debtors out of debt and onto a path towards a brighter financial future. 

Wayne Kay 00:04
Welcome to the Debt Matters podcast where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada. 

I’m Wayne Kay and in today’s show we’re going to be talking about Bankruptcy and maybe, maybe your preconceived notions regarding who will actually know that you filed for Bankruptcy. Is your employer going to know? Can this damage your work relationship and will it affect your jobs in the future? 

To find out all about this and more, my guest today, Derek Chase from Derek L Chase & Associates, Licensed Insolvency Trustee serving Vancouver Island, Sunshine Coast, BC and BC north coast. Derek, thanks for being here.

Derek L. Chase 00:42
It’s my pleasure, Wayne. Always look forward to our talks.

Wayne Kay 00:45
Well, I love it because there’s so many people that we’re helping out. We’re getting emails in with people asking questions, which is great because a lot of people have these preconceived notions when it comes to that word Bankruptcy. You deal with it every single day. Probably, I don’t know, if it is old information that we base all of these old thoughts around.

Derek L. Chase 01:09
I think so. I think it’s never a word that’s associated with good things and no one would set out to go there. But we see it every day, so we get used to it and we really just view it as a tool. Just like you might need a wrench or a screwdriver.

Bankruptcy is a financial tool to help fix a problem and it’s one of a number of options, but it does impact your life in a number of ways. So let’s talk about employment today.

Wayne Kay 01:41
Okay, terrific. And one of the things that people worry about is whether or not their employer is going to know that they filed for Bankruptcy protection. Is that a thing?

Derek L. Chase 01:50
Generally, I’d say no. I would say your employer will not find out that you have gotten protection through a Bankruptcy filing. Conversely, it’s also good to know about who will know that you have done this. And generally speaking, your creditors have to know because they’re notified that it’s happened. So they stop collecting and stop bothering you and the phone calls stop and the collection pressure stops.

The federal government also knows because they regulate the whole thing, so they need to know that. And lastly, the Licensed Insolvency Trustee office knows. So that’s basically who knows about it. 

I’d say the only time your employer would find out about it is if your situation has gone to a bit of an extreme and someone is garnishing your pay. Because a Bankruptcy stops that garnishment. So we would notify the employer to stop the garnish. So then the employer would know, in that setting.

Wayne Kay 02:55
But that would be a good thing for you, for sure.

Derek L. Chase 02:58
Yes, you want that relief, you want the collection to stop. So interesting, even if the Canada Revenue Agency is garnishing your paycheque, a Bankruptcy filing or a Consumer Proposal will force them to stop – even from the government.

Wayne Kay 03:18
That’s good. But people wonder if there is any fear of being fired? But really your job and your personal finances, two different worlds.

Derek L. Chase 03:31
It is, yes. There are specific federal rules which would prevent a person from getting fired. It can get more complicated if you’re part of a professional association and there’s internal rules within a lot of associations which require disclosure to the association of what’s going on. 

I can think of times in the past where I might be talking to a lawyer for an example that’s having difficulty. They would have to disclose that with their society or real estate agents. 

There’s a couple of other ones, like an accountant or perhaps somebody that works in investments. They need to disclose if there’s going to be a Bankruptcy. They need to talk to their association about that. And a lot of times they’ll kind of skirt around that a little bit by using the Consumer Proposal road to reorganize rather than the Bankruptcy option. 

But for the vast majority of people, life goes on. You keep working your job, your employer doesn’t find out, and it’s really quite smooth.

Wayne Kay 04:48
But the big difference is that you finally got help with this situation. So hopefully your work life is getting better.

Derek L. Chase 04:55
I wouldn’t be surprised if a person’s productivity improved at their job once that kind of load is off their mind and life is a little bit less stressful. Sometimes we hear about people getting phoned at work about their debts, which is very awkward. So that sort of noise would stop and yes, it tends to be very much a fresh start with less stress. So that’s good.

I guess if an employer really wanted to –  if somebody wanted to find out, you can search through the federal government to determine if someone has made a Bankruptcy filing. But that’s quite rare. I think there is a cost to do that, which is a bit of a deterrent, but that information is available if someone wanted to dig hard enough.

Wayne Kay 05:47
Now, back in the old days, was there a thing when they would put something in the newspaper?

Derek L. Chase 05:53
Well, that’s still in today’s world as well. But what’s happened is that you rarely see those notices because they only apply to certain situations. 

For example, if a corporation made a Bankruptcy filing, you’ll see that notice in the classifieds, or if it’s a personal situation and the Licensed Insolvency Trustee has to handle a lot of assets that are free and clear of any debt. Then there’s a requirement to put that notice in and hold a meeting. But it’s becoming more and more rare, I guess, to see that sort of notice. It’s not a requirement for every situation.

Wayne Kay 06:40
Now, does Bankruptcy affect future jobs or anything in your future life?

Derek L. Chase 06:48
I would say it won’t if there were. Ideally, you want to finish a Bankruptcy, that’s important. That’s another podcast about the importance of getting a discharge.

As far as the future goes, if you wanted to be a director of a corporation in British Columbia, like a president or a vice president of a private corporation, you can’t be in the status of Bankruptcy. You have to get that discharge. 

But future employment, just working as an employee, I don’t think, especially in today’s labor market, that there’s going to be any effect at all if the employer did do some type of search or brought it up. I think we’ve got a saying that you can’t go wrong with the truth and just tell them your story. I think you’d probably be surprised that there’d be a lot of compassion there.

Wayne Kay 07:44
I recently joined a board of directors for an organization and I believe actually that was one of the questions that they did ask. Are you currently or have been in Bankruptcy?

Derek L. Chase 07:56
Well, I mean if you’re going to be working in a role, say you were the treasurer of that organization and you’re handling the funds, they might want to have that as a consideration, but it doesn’t mean you can’t get a job.

Wayne Kay 08:10
Now you mentioned finishing the Bankruptcy and you said we should do a whole podcast on that – but why don’t we dive into that on exactly what that means? 

I think a lot of people think that when you start your Bankruptcy, you fill out the forms and you do what you need to do. It’s pretty much done at that point, but that’s not how it works. So can you take some time and walk us through step by step what you can expect when you get into filing Bankruptcy?

Derek L. Chase 08:39
For sure. Once you start a Bankruptcy, you do get the relief from the creditors and unfortunately, sometimes people kind of wander away after that. But I’d say the majority of people will follow through and comply with some of the duties that they’re required to do in order to get what’s called a discharge from Bankruptcy. A discharge is scheduled to be automatic at the end of a period of time, depending upon your income and if you’ve had a prior Bankruptcy filing. 

So the duties, very briefly, a lot of duties are super straightforward like keep the trustee advised of your address. There’s two financial counseling sessions to go to. You have to file monthly reports showing your income and expenses, and give the Trustees office your tax information. Those are some of the basic duties to comply with. 

As long as people do those and basically cooperate with what’s requested, then that automatic discharge is waiting for them at the end of 9 months or 21 months, or that’s the majority of the settings. And then if you don’t get that, if you don’t do some of those duties, then the Trustee is obligated to oppose your discharge from Bankruptcy.

So you don’t get it automatically, your file is going to go to Bankruptcy court and there’s going to be additional steps for a person to take to get a discharge. If you don’t get a discharge, that’s a problem because if we go back to the example of Canada revenue garnishing – they can start up collecting again. Your creditors – it’s like a bad zombie movie where your creditors can come back at you if you don’t get that discharge. So life can get not so easy if you started a Bankruptcy but didn’t finish it.

Wayne Kay 10:42
What’s the reason somebody wouldn’t finish it? Because it seems like it would be a bit of a nightmare to not complete it.

Derek L. Chase 10:50
You’d have to ask them. I would agree. It doesn’t make a lot of sense to not finish it.

Wayne Kay 10:57
For the most part, I think most people do complete what they were required to do.

Derek L. Chase 11:02
Absolutely. High 90% of people would do what they need to do.

Wayne Kay 11:09
Wow, okay. And then all of a sudden at that point, they are free to start rebuilding their credits and rebuilding their lives.

Derek L. Chase 11:20
Yes. That whole rebuilding process I think, starts right away, even right as the Bankruptcy has started. We’re hopefully getting people on a track where they can start saving and all the while through bankruptcy, they’re paying their utilities, they’re paying their phone bill, maybe they’re paying a car payment. 

So the whole trend of building positive momentum, we would hope, starts very quickly and then certainly getting that discharge accelerates it. But that whole process is what we look at going on a positive momentum type trend.

Wayne Kay 12:00
Do you ever have people that after they’re discharged – do they ever come back to you and ask more questions and say, I’ve got some situations coming up or I’m wondering about this financially, what do you think? Do you ever have that happen?

Derek L. Chase 12:14
We do. Sometimes people call in just to chat, just to ask for our advice. But we don’t provide any investment type advice but if we can help, we do. We try to be helpful, but there are certain guidelines that we might just redirect them to another professional that could help them. But yes, people do stay in touch.

Wayne Kay 12:37
Well, I would think because going through this, it’s such a difficult situation that a lot of people are in when they actually reach out to get some help from a Trustee.

At that point, finances are usually in a pretty bad place and there’s a lot of struggle on a lot of sleepless nights and a lot of worry. And you build this relationship through it where they trust you because you’ve helped them out of a terrible situation. And so now there’s a place where they can make that phone call and ask a question.

Derek L. Chase 13:11
That’s true. I wouldn’t say it’s super common, but it does happen from time to time. And we always like to say we try to be helpful and we’ll take a few minutes and talk about whatever is on their mind. But sometimes it’s a setting where we wouldn’t step in and continue to do their tax return or we wouldn’t provide, say, yes, that’s a good choice where to put your money now, right?

Wayne Kay 13:38
Yes, no, not at all. You can’t be doing that. Well, what if somebody still needs protection but they don’t want to go through Bankruptcy? What was the other option?

Derek L. Chase 13:46
You mean if they’re calling back because they’re in financial difficulty again?

Wayne Kay 13:50
No, let’s say let’s say they wanted to go through, they’re in financial trouble and they decide Bankruptcy is not going to be the place that they want to go, but they want to do maybe a Consumer Proposal. Can you do a quick discussion on Consumer Proposals versus Bankruptcy? What are the main differences?

Derek L. Chase 14:10
Yes, there’s quite a few differences. I suppose you don’t have a whole lot of duties to comply with in a Consumer Proposal. Like I mentioned earlier, in a Consumer Proposal you’re pitching an offer for a payment of a percentage on the dollar, overtime typically, and then there is a voting process and a Consumer Proposal, so the creditors have to agree to that – the majority of the voting creditors.

And then you essentially have a contract such that you’re making a payment into the Consumer Proposal. Once you finish that payment stream and complete the same two financial counseling sessions that are in the Bankruptcy process, then in a Consumer Proposal you get a certificate of full performance. 

I suppose in contrast, in a Bankruptcy setting, the payment is often very much a function of what your income is. So if your income goes up, your payment is going to go up, or if your income goes down, your payment could go down. In a Consumer Proposal, you’re more locked into a certain payment structure, so that’s a big difference.

Consumer Proposals tend to run a little bit longer than a Bankruptcy filing goes, but it’s a little bit less heavy on your credit history. I like to use them as two different roads to get around the mountain. One is a little bit longer than the other one, but they’re both going to get you to the other side of that mountain of debt and get you on to a better place. Those are some of the differences.

Wayne Kay 15:47
So there are options and if somebody wants to know which is the right option for them, of course they can just contact you at the office.

Derek L. Chase 15:54
Yes, absolutely. We’d be happy to take half an hour or so and just give a person some feedback once we get an understanding of what they’re facing. I always personally try to get as much information as I can before I make a big decision like that. So we would welcome the inquiry and take the time to answer all the questions.

Wayne Kay 16:13
Perfect. Well, thank you very much, Derek. Any final words you want to share regarding Bankruptcy and maybe future employment?

Derek L. Chase 16:20
Yes, I’d say life goes on and it’d probably be easier once you don’t have the stress of the creditors. So future employment is going to happen and I think the job market is great right now so there should be no worries for people.

Wayne Kay 16:34
Terrific Derek, thanks very much for being on the show.

Derek L. Chase 16:37
You’re welcome.

Wayne Kay 16:38
Well, thank you to my guest today, Derek Chase. You can learn more or schedule a free consultation with Derek and his team at And that’s it for today’s Debt Matters podcast.

Make sure you subscribe wherever you get your favorite podcast from and of course for more information you can always checkout Thanks for listening.

About Derek Chase

Derek Chase is a Licensed Insolvency Trustee in British Columbia. He has been helping individuals and corporations restructure their debt since 1997. His areas of practice include personal and corporate insolvency including Consumer Proposals and Bankruptcy. The best part of his work is to be able to witness lives change for the better when the heavy burden of unmanageable debt is lifted.  

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