Nobody wants a private matter like bankruptcy to become public knowledge. But the truth is only a handful of people will ever know.
This column will explore how bankruptcies are recorded and the organizations involved in the process.
Are bankruptcy filings public record?
Although bankruptcy filings are kept on public record, only people who need to know will likely discover that you went bankrupt.
The OSB and your trustee
All bankruptcies are recorded by the Office of the Superintendent of Bankruptcy (OSB), and Licensed Insolvency Trustees are required to file all bankruptcies with the OSB.
Anyone who pays to search the database
Bankruptcies and consumer proposals are recorded in the Bankruptcy and Insolvency Records Search database, meaning it’s a matter of public record.
Anyone can access the database, but most people won’t look because users pay a fee per search for the privilege.
Creditors, credit bureaus and future lenders
When you declare bankruptcy, the OSB issue a Certificate of Appointment, confirming your bankruptcy. Your creditors are notified, along with the credit bureaus, who will update your credit report accordingly.
If it’s your first bankruptcy, it appears on your credit report for six to seven years after completion. So, if you apply for credit during this time, potential lenders will see that you filed for bankruptcy.
As a result, lenders will see you as a credit risk, so credit applications are less likely to be approved during this time.
But time’s a great healer: after this period has passed, any mention of your bankruptcy will disappear.
Will my bankruptcy be published in a newspaper?
It is rare for a newspaper to publish a bankruptcy in Canada.
There is no obligation for a Licensed Insolvency Trustee to publish a bankruptcy notice in a newspaper for most bankruptcies because there are little or no assets.
If you are filing for bankruptcy with more than $15,000 of non-exempt assets, a notice of bankruptcy will be published in a local newspaper to notify your creditors.
How do my creditors find out about my bankruptcy?
Your Licensed Insolvency Trustee will notify each of your creditors to inform them about your bankruptcy, and your creditors will place a note on the account.
When applying for new credit over $1,000, you must tell lenders that you are bankrupt as part of your bankruptcy duties. This is a legal requirement.
New lenders can see your bankruptcy when they perform a credit check.
In most cases, only the Office of the Superintendent of Bankruptcy, your Licensed Insolvency Trustee and your creditors will know about your bankruptcy.
If you apply for a new line of credit, the lender will know about your bankruptcy if it hasn’t dropped off your credit report.
Although somebody could take the time to search public records, it’s rare for anyone to do this, and the person would have to pay for it.
Hopefully, this will put your mind at ease if you are worried about who will know about your bankruptcy.
The truth is that most people aren’t interested. Remember, bankruptcy is nothing to be ashamed of whatsoever.
Most people go through financial hardship at some point in their lives, and we all need help to fix financial problems.
Bankruptcy should be commended; you are taking sensible action to resolve your debt problems. Once you complete your bankruptcy, you are debt-free, and you can start rebuilding your credit.
If you are interested in filing for bankruptcy or have further questions, let us connect you with a Licensed Insolvency Trustee near you for a free, confidential consultation.
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