How Does Bankruptcy Affect Employment?

Impact of Bankruptcy on My Job

‍Most individuals in Canada, like in many parts of the world, find the idea of filing for personal bankruptcy quite daunting, mainly due to a lack of understanding of its impact on their daily lives and job situation. This article aims to demystify the effects of bankruptcy on employment.


For many Canadians, the term “bankruptcy” can instill a sense of fear, primarily due to its perceived impact on their professional life. Interestingly, the Bankruptcy and Insolvency Act have been designed to provide debtors with an opportunity for a fresh start while maintaining a fair standard of living.

Understanding Bankruptcy

Bankruptcy is a legal process that provides relief to individuals and companies overwhelmed by debt. The majority of the time, an individual’s employer is not informed about their employee’s bankruptcy proceedings.

Effects on Current Employment

In most situations, the current employment status of a person filing for bankruptcy is not affected. Employers are generally not notified about an employee’s bankruptcy proceedings unless the employee allows it or if the employee’s salary is garnished.

Potential Future Employment Constraints

While bankruptcy does not usually affect current employment, it can potentially constrain future job prospects. Certain types of jobs might have restrictions for individuals who have declared bankruptcy and haven’t yet been discharged.

Trust Account Management

One of the constraints relates to the management of trust accounts. If an individual has filed for bankruptcy and is yet to be discharged, they cannot manage trust accounts. In such cases, a different individual would be required to manage these accounts until the bankruptcy discharge is received.

Bondability Concerns

Being bondable refers to the ability of an individual to pass all background checks necessary to be covered by their employer’s insurance policy against potential loss or theft. Until a discharge is received from personal bankruptcy, a person cannot be considered bondable.

Professional Licensing and Bankruptcy

Certain professional organizations may have restrictions on members who have filed for bankruptcy. For example, an accountant or insurance agent might face limitations in obtaining a license to practice. The professional licensing body would have detailed information on potential repercussions.

Consumer Proposal as an Alternative

For individuals required to handle trust accounts, maintain bondability, or uphold professional standards for their job, a Consumer Proposal might be a suitable alternative. This also offers creditor protection and a fresh start.


Filing for bankruptcy can seem intimidating but understanding its implications on employment can provide a clearer picture. Whether it’s managing trust accounts, maintaining bondability, or handling professional licensing, being aware of these aspects can help individuals make informed decisions.

Contact Information

For more personalized advice and a no-cost initial assessment of your situation, please feel free to contact our office.

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