Licensed Insolvency Trustee
Headline: Canadian economy facing deep-rooted problems as wages stagnate, household debt mounts:
Wages are barely keeping up with the cost of living, business executives complain they can’t compete and households are carrying record levels of debt.
Via: Vancouver Sun
Headline: Household debt will pose major risk to Canada’s economy for next three years. Past 2020, ‘it’s really going to hit the fan,’ warn economists
Via: Vancouver Sun
If I declare bankruptcy, will it affect my employment? This is a fairly common question that a Licensed Insolvency Trustee (“LIT”) gets asked at the initial interview stage.
You may be wondering if your current or future employer will discover a bankruptcy filing and whether that impacts your ability to obtain work or keep your job.
In a typical bankruptcy, the LIT doesn’t need to notify your employer. However, there may be situations when filing bankruptcy may affect your application to take on a new job. Below we answered some of the most common questions around bankruptcy and employment issues.
Will My Current Employer Find out I’ve Filed for Bankruptcy?
As part of the usual bankruptcy process, your employer is not told that you’ve filed a bankruptcy.
The only time an LIT will notify your employer that you have filed a bankruptcy or consumer proposal is in cases where there may be a garnishee in place or where the LIT needs payroll information to determine surplus income or prepare tax returns. In most cases where the LIT requires information from the employer, we request the debtor to obtain it for us so we don’t have to contact the employer directly for it.
Can I Lose My Job if I File for Bankruptcy?
It is illegal in Canada for an employer to fire someone because they filed for bankruptcy.
Certain professional associations have professional conduct standards that require an individual to disclose if they are bankrupt. Often these are professions that involve the handling of money and/or trust accounts. Examples are insurance/investment broker, real estate agent, lawyer or accountant.
Professionals often file a consumer proposal as an alternative to bankruptcy. Since someone who has entered into a repayment arrangement through a consumer proposal is not a bankrupt, they are generally excluded from these professional guidelines. However, any professional should first check any regulations with their professional association or society before filing.
In general, if the debts you owe are personal in nature and not the result of fraudulent or poor business practices, an insolvency filing shouldn’t impact you professionally. However, if you are considering an insolvency filing, it’s still important to satisfy yourself of the disclosure requirements to your professional association.
If I File for Bankruptcy, Will I be Able to Get a Job?
You are not required to disclose that you have filed for bankruptcy or a consumer proposal when applying for a job. Potential employers may ask if you are currently bankrupt as part of the application process. They may also choose to conduct an insolvency search or credit check as part of hiring process. This is more common if you are applying for a position that involves significant financial trust. If you think that an employer is going to ask or perform a background check, it is always better to be up front about it.
Some positions require employees to be bonded by the firm’s insurance company to protect against employee theft and dishonesty. Bonding provides the firm with compensation in the case of a loss. It’s a protective measure for the employer. In reality, a bankruptcy on your credit report is not necessarily a bad thing. It shows that you have dealt with your debt. If you are undischarged, then you only have one obligation and that is to your LIT. Unfortunately, if you are unable to be bonded, an employer may choose not to hire you for these types of positions.
As an undischarged bankrupt, you can also be precluded from holding certain roles such as a director of a company, a society or other similar type position until such time as you are discharged from bankruptcy.
Consider filing a Proposal
Many concerns regarding the impact of a bankruptcy on employment do not apply in the case of a proposal. A proposal is a repayment arrangement made with your creditors, to repay a portion of what you owe. While a proposal is still a legal process administered under Insolvency legislation that can only be filed through an LIT, you’re not a bankrupt when you’re in a proposal. As such, a proposal can often solve some of the situations that arise in terms of your employment and looking for debt relief solutions.
A Licensed Insolvency Trustee will carefully review your financial situation and provide you with the best course of action without unduly affecting your employment.
Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.
Call us. It’s not too late. (604) 605-3335
In previous newsletters, we addressed the issue of possible changes being proposed to the counselling directive by the Office of the Superintendent of Bankruptcy (“OSB”). The OSB issued its draft directive in October 2017 and commenced public consultations, inviting comments from stakeholders.
On January 29, 2018, the OSB issued its final Directive relating to the qualifications of Insolvency Counsellors, referral arrangements and debt advisors, along with the transition phases and its plan to revamp the entire counselling curriculum. The Directive can be found here.
The OSB has stated that the first phase of amendments will contribute to a level playing field for all LITs and reduce risks to the integrity of the consumer insolvency process related to:
It will also provide LITs with flexibility to accommodate debtor circumstances in the delivery of insolvency counselling, and by ensuring insolvent Canadians continue to benefit from:
The second phase of the counselling amendments, including on line modules, will de developed in 2018 and beyond. No timetable for the implementation has been set.
Improved protections
The aim of the Directive is to ensure that:
Additional delivery flexibility
There is no restriction from LITs relying on third-party BIA Insolvency Counsellors. However, these counsellors must meet registration requirements under the Directive and adhere to the same professional standards as LITs themselves are required to follow including adherence to all relevant provisions of the BIA, its Rules — including the LIT Code of Ethics – and Directives from the OSB.
The Directive applies only to LITs. It does not restrict a third party to provide unregulated products and services to Canadians outside the scope and parameters of federal insolvency legislation.
Conclusion
It is our view that the changes to the Directive will enhance the counselling process for consumers and provide delivery flexibility for LITs where the debtor is in a remote location or where there are other circumstances where a face to face meeting would be inconvenient. The Directive comes into force on October 1, 2018. Until that time, the previous Directive applies. Details regarding this Directive can be found here.
Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.
Call us. It’s not too late. (604) 605-3335
Here’s a collection of stories regarding the federal budget released 27 March 2018.
Headline: Federal budget highlights: Twelve things you need to know: From gender equality and parental leave, to research funding and small business tax reform, here are the key changes in the federal budget
via Globe and Mail
Headline: Federal budget 2018: Highlights of Bill Morneau’s ‘equality + growth’ budget.
via CBC News
Headline: Trudeau government reveals the 2018 federal budget.
via Global News
Headline: Five ways the federal budget may affect average Canadians: Smoking just got more expensive, housing hopefully will get cheaper and the tax hit for cannabis.
via Financial Post