Many people fear the word ‘bankruptcy’ and one reason in particular for this fear is the possible effect a bankruptcy may have on your job.
The good news is that the bankruptcy rules were designed in such a way to give some a chance of a fresh start, protection from overwhelming debts whilst at the same time the opportunity to maintain a reasonable standard of living.
One specific rule in the Bankruptcy and Insolvency Act states that no-one can terminate or amend any agreement with a bankrupt, just because of the bankruptcy, however this does not necessarily protect you from termination if your existing employment contract states that you could be terminated or restricted from performing certain tasks in the event of a bankruptcy.
For the vast majority of people, your employer will not care if you’re bankrupt or not. In fact, if you’re getting collection calls at work, the employer may encourage you to file a bankruptcy to stop the calls so you can get back to concentrating on your job.
If you file a consumer proposal, there is a specific rule that states your employment cannot be terminated solely on the grounds of you filing a consumer proposal.
There are some restrictions on the type of work you may or may not be able to continue doing if you file a bankruptcy.
The first relates to trust accounts. If you handle trust accounts (such as a lawyer, in real estate or even a bankruptcy trustee), you cannot manage those trust accounts whilst you are bankrupt. You would need to have someone else manage those accounts, or, file a consumer proposal instead of the bankruptcy.
The second restriction relates to being bondable. Bondable means that your employer insures you in case of a possible monetary loss. This usually applies in jobs where you handle cash or assets on behalf on someone else (such as when you work in bank or for the government). You would need to check with your employer to determine exactly what impact a possible bankruptcy may have. Again, if it could have a serious impact on your job, you could consider a consumer proposal as an alternative.
The third restriction would relate to professional standards set by certain organisations. For example, if you’re an accountant, insurance agent or are part of any kind of professional body, there may be certain restrictions you need to be mindful of and that may result in the loss of your license to practice. The professional body or licencing board that you belong to will tell you if and when, your licence might be re-instated. Sometimes it could be immediate, sometimes not until you are discharged from the bankruptcy. Again for people in this line of work, the filing of a consumer proposal has no effect.
If you are concerned, this is an issue you should raise with your trustee prior to filing bankruptcy. They can provide you with advice as to what may occur based on similar cases they have dealt with in the past.