Consequences of Bankruptcy

The Aftermath of Bankruptcy: An In-depth Analysis

A bankruptcy filing is a legal proceeding that allows individuals or businesses, unable to pay their debts, to seek relief from some or all of their debts. In many cases, bankruptcy can provide a fresh start. However, it’s crucial to understand that the consequences of bankruptcy can be severe and long-lasting. This comprehensive guide will delve into the various effects bankruptcy can have on your personal, professional, and financial life.

The Impact on the Debtor

Career Consequences

Bankruptcy filings are public records, which means potential employers or even your current employer can easily access this information. Certain industries, such as finance and banking, may be particularly wary of hiring an individual who has filed for bankruptcy. This could significantly limit your career opportunities, especially if you’re seeking roles that involve handling money or trust funds.

Credit Availability

Another major consequence of bankruptcy is the negative impact on your ability to borrow money or access credit. After a bankruptcy, you may find it extremely difficult to secure loans or credit cards. Even if you do manage to qualify for credit, you’re likely to face much higher interest rates due to the perceived risk associated with lending to someone who has previously declared bankruptcy.

Social Repercussions

The social consequences of bankruptcy can be significant. In many societies, financial status is of great importance, and bankruptcy can cause considerable strain on relationships. It’s not uncommon for those who have filed for bankruptcy to face judgment or stigma, which can lead to feelings of guilt, shame, or embarrassment.

The Effect on Family

Income Considerations

The income of your spouse or common-law partner can affect the outcome of your bankruptcy. If your family income exceeds a certain threshold, you may be required to make additional payments to your bankruptcy trustee. This is something you’ll need to discuss in detail with your trustee, taking into account your family’s specific circumstances.

Property and Assets

In bankruptcy, it’s possible that you’ll lose some of your property. However, each province has different rules regarding what property is exempt from seizure. In Saskatchewan, for example, you may be able to keep your home as long as you continue to live in it. One vehicle may also be exempt, provided it falls within the prescribed value limit.

Student Loans and Bankruptcy

Not all student loans can be discharged through bankruptcy. The dischargeability of a loan depends on several factors, including the specifics of your loan agreement, when you stopped being a student, and whether your loan is with the government or a private company. A bankruptcy trustee can help you navigate these complexities.

Non-dischargeable Debts

Certain debts are not discharged in bankruptcy, including fines, penalties, restitution orders, certain civil damage awards, alimony, maintenance debts, and debts arising from fraud. It’s crucial to familiarize yourself with these non-dischargeable debts to understand what financial obligations you may still be responsible for even after declaring bankruptcy.

Tax Debts

Not all tax debts are dischargeable in bankruptcy. While personal income tax debt may be discharged in some cases, debts for Goods and Services Tax (GST), Provincial Sales Tax (PST), and employee income taxes are not discharged.


The consequences of bankruptcy can be far-reaching, affecting various aspects of your life from your career opportunities to your social status. Therefore, it’s essential to consider these factors carefully before deciding to file for bankruptcy. Always consult with a bankruptcy trustee or legal professional to fully understand the implications and make the best decision for your financial future.

Additional Resources

For more information about the consequences of bankruptcy, visit the Government of Saskatchewan’s official website or the Bankruptcy Insolvency Act.

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