Will bankruptcy affect my employment?

A significant factor when considering bankruptcy is whether it will affect your current employment or obstruct you from finding a new job.

This simple guide will show you how bankruptcy can affect employment.

Will my employer know about my bankruptcy?

You do not have to inform your employer that you’ve declared bankruptcy.

Although your employer isn’t notified, your Licensed Insolvency Trustee would need to contact your employer to have a wage garnishment lifted.

While your employer cannot fire you if you go bankrupt, some sectors require employees to disclose financial difficulties. Typically, these include finance, insurance, and industries where potential blackmail could be a threat.

Jobs that rely on professional credentials or licenses (e.g. insurance brokers, chartered professional accountants, solicitors, etc.) may also face restrictions (a consumer proposal has fewer restrictions).

Before you file, check with your professional board or body.

See also: Who will know about my bankruptcy?

Can I be bonded if I declare bankruptcy?

Bankruptcy might also affect you if you need to be bonded for your job, and the bonding company will want to know what caused your bankruptcy to ensure you are not a risk.

This could be easier once you are discharged from bankruptcy.

If you need to be bonded, consider filing a consumer proposal instead.

Just ask a Licensed Insolvency Trustee if you are unsure.

If I file for bankruptcy, can I get a new job?

Bankruptcy usually doesn’t impact your job prospects, but an employer may ask you if you are bankrupt.

Some industries may also run a credit check or request your credit report before making a formal offer of employment. This is particularly common in the financial sector.

Can I be a company director while bankrupt?

In most provinces, you cannot be a company director during your bankruptcy, and you must resign. Once you’re discharged from bankruptcy, you can be a director again.

If you want to remain as a director and continue to manage your business, consider filing a consumer proposal.

While a consumer proposal is governed under the Bankruptcy and Insolvency Act, it’s not the same as bankruptcy. Instead, you offer to repay what you can afford rather than the total amount, with the remaining balance forgiven by your creditors.

By entering into this formal agreement, you can keep your assets and continue to control your business.

What happens to my company shares if I declare bankruptcy?

If you are a shareholder in a company, your shares will form part of your bankruptcy estate. These shares are sold by your trustee and distributed to your creditors.

If the shares are of no value, they are usually returned to you at the end of your bankruptcy.

Are wages protected in bankruptcy?

You will not lose your wages in bankruptcy, but you have to provide evidence of your income and expenses each month to determine if you have earned more than the income threshold set by the government.

This depends on your family size and exists to ensure you pay enough into your bankruptcy while also ensuring you earn enough to maintain a reasonable standard of living.

Anyone earning more than the threshold will make surplus income payments to their creditors during the bankruptcy process.

Is there another way that doesn’t affect employment?

Many people choose a consumer proposal as a less drastic solution to their debts.

Because a consumer proposal is not bankruptcy, it can alleviate most issues affecting your employment, and you can still be the director of a company.

However, always check with your professional board or body to determine what happens if you enter into bankruptcy or a consumer proposal.


In most cases, bankruptcy won’t affect your employment, but some industries require you to disclose this information. Always check with your professional board or body.

There are many advantages and disadvantages to bankruptcy, which a Licensed Insolvency Trustee can explain in more detail.

If you are still unsure and would like to find out more about how your employment might be affected, let us connect you to a Licensed Insolvency Trustee who will guide you towards the best solution for your circumstances.

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