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Bankruptcy & Your Professional Reputation

bankruptcy professional reputationFinancial problems affect all types of people.  Sometimes, it’s a failed business or a marital breakdown that causes the problems; sometimes it’s just a buildup of debts over a long period of time.  As a society, we have grown to rely on credit and there are many financial institutions that are ready and willing to grant it. The problem is that with credit comes debt and if the debts get out of control, sometimes you have no choice but to consider your options under the Bankruptcy and Insolvency Act. People are struggling financially and Canadians are borrowing at record levels as evidenced by the growing amount of consumer debt (made easier by record low interest rates).

I see people from all walks of life. I’ve helped lawyers, accountants, business men and women, real estate agents, insurance sales representatives and even bankers. These types of people are often concerned about their professional reputations if they were to file a consumer proposal or a bankruptcy.  In most cases, these types of people belong to professional associations that set the standards for code of ethics and business practices for their particular profession. In most instances, it is necessary for the debtor to simply disclose to their business association that they have filed a bankruptcy or a consumer proposal and there are no repercussions.

Usually, the only time there could be problems is if you are in a business where you are handling trust funds. For example, a real estate broker that handles trust funds could have an issue, but a real estate agent who works for a broker would likely have no issues. Prior to making a decision to file a bankruptcy or consumer proposal, I suggest that professionals contact their association to make sure that they are aware of the process of disclosure and to be assured that there will be no problems for them to continue to practice in their profession after an insolvency filing.

Apart from disclosing to your professional association about your insolvency filing,  you should be able to continue to work and earn a living in your chosen profession.  In either a bankruptcy or a consumer proposal, there is no formal publication of the event in a newspaper; so it is unlikely that any body that you are dealing with on a day-to-day basis would ever even find out about it. However, to file a bankruptcy or a consumer proposal, you must file the documents with a trustee in bankruptcy who in turn files them with the Office of the Superintendent of Bankruptcy. These documents are considered  a matter of public record, so technically, anyone could contact the Office and get the details of your filing. As a practical matter few people do other than perhaps the credit bureau.

If you’re worried about how a bankruptcy or consumer proposal could affect your profession, contact a licensed trustee in bankruptcy to discuss your personal situation. We’ll help you come up with a plan to deal with your debts and avoid negatively impacting your career. Even if bankruptcy is not an option based on your designations, you have options. We can help.