It’s a Myth That Your Friends and Family Will Know You Went Bankrupt
The thought of filing for bankruptcy can seem scary and drastic but it’s often the most effective way to deal with unmanageable debt.
Unfortunately, many people delay filing for bankruptcy because of the misconceptions surrounding the process.
This reticence means many people are avoiding the very solutions that could help them to escape debt for and reset their finances.
By dispelling the myths surrounding bankruptcy, we hope to add clarity to a subject that’s often misinterpreted.
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For example, you may assume that a bankruptcy will stay on your credit file forever (it won’t!).
Similarly, one of the most common misconceptions we need to correct is the myth: everyone will know I filed bankruptcy.
In fact, you’d be surprised just how few people need to know when you file for bankruptcy.
Who is told when I file for bankruptcy?
When you file for bankruptcy, the only people who are aware of the proceedings are you, your trustee, the people you owe money to and the court personnel who handle the application.
Of course, your trustee can only notify people if they are required by law to do so or you give them permission to discuss your situation with someone else.
Similarly, court staff are required to act with complete discretion at all times, so you don’t need to worry about your financial circumstances becoming local gossip.
Although a bankruptcy or a consumer proposal is on public record, it’s highly unlikely that anyone will specifically search for this information.
Not only do you have to pay to access this type of information, but the data available is also fairly limited, so it doesn’t offer much incentive for people to randomly start searching for acquaintances that may have been made bankrupt.
While major corporations and global celebrities might have their records accessed, you’ve got nothing to worry about if you don’t fall into either of these categories!
Once you file for bankruptcy, your trustee will notify the Office of Superintendent of Bankruptcy (OSB) and your creditors.
At this point, a note is placed on your credit file to indicate that you have filed for bankruptcy.
If potential lenders searched your credit file, they would see this information, but it would, of course, be subject to data protection regulations.
Will my employer know that I’m bankrupt?
Your employer doesn’t have to know that you’re filing for bankruptcy, but you may choose to inform you.
If your wages are currently being garnished, for example, you may request that your trustee contacts them and informs them of your bankruptcy so that the garnishment is stopped.
However, if your wages aren’t currently being garnished and you don’t want to inform your employer, you aren’t required to do so.
Aren’t bankruptcies shown in local papers?
No, this is a common misconception and one which puts a lot of people off filing for bankruptcy.
If you file for bankruptcy and you have assets with a resale value of more than $15,000, your trustee is required to inform your creditors by placing an ad in the local paper for a short amount of time.
However, the vast majority of people who are filing for bankruptcy don’t have assets worth more than $15,000 (once any secured debt is taken into account).
It’s much more common for businesses that are filing for bankruptcy to be the subject of an advertisement in the local newspaper but it’s rare for individual bankruptcies to be published in this way.
If you are filing a consumer proposal, as opposed to a bankruptcy, there is no requirement to place any type of advertisement in a local newspaper or anywhere else.
Dispelling the Myths Surrounding Bankruptcy
As there are so many misconceptions surrounding bankruptcy, few people know just how the process works and how beneficial it can be.
For many people, filing for bankruptcy is the fastest and easiest way to resolve their debt problems.
By speaking with a licensed insolvency trustee, you can access all the information you need about bankruptcy and consumer proposals.
You can only choose the right course of action once you have all the information at hand, so learning more about debt relief services is always a good place to start.
At Bankruptcy Canada, we’ve helped over 200,000 people resolve their financial issues and we’re available to help you too.
You can contact us, in confidence, 24 hours a day, 7 days a week on (877) 879-4770.
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