Bankruptcy is taboo, a subject no one ever wants to talk about. However, sometimes it is the best option when all other options do not work. Depending on your financial situation, bankruptcy may actually be exactly what you need to get your life back in order. It is important to truly understand the reasons behind the actions you are taking so that you can remain positive and use the opportunity to get your financial life in order.
Who Must Know About Your Bankruptcy?
According to the Bankruptcy and Insolvency Act of Canada, there are several individuals or entities that need to know about your bankruptcy status. The following entities have the legal right to access your bankruptcy information because it affects their interactions with you.
- Potential lenders. This includes any person or institution that you are likely to get financial assistant from while your bankruptcy status is still in effect.
- Creditors. The creditors who you are working with when you file for bankruptcy will receive a detailed report from your bankruptcy trustee.
- The federal government. The federal government maintains a list of individuals who are bankrupt in their bankruptcy records. Licensed bankruptcy trustees must submit a list of individuals who have filed for bankruptcy to the superintendent of the bankruptcy. Any debt that is forgiven in this process must be reported to the Canada Revenue Agency as it is considered taxable income.
- Credit bureaus. The credit bureaus (Equifax and TransUnion are the two major bureaus in Canada) will automatically know about you filing for bankruptcy because they receive information from the Office of the Superintendent of Bankruptcy. This information typically remains on your credit report for 7 years and will affect your creditworthiness.
Unfortunately the issue with bankruptcy is that itâ€™s public domain, the reports that the Office of the Superintendent of Bankruptcy keeps are open to the public. This means anyone who really wants information about you can easily find it and itâ€™s essentially impossible to stop them. While we understand that this may seem like itâ€™s a violation your privacy, in general there arenâ€™t many people who are willing to go through public records just to find out that youâ€™ve field for bankruptcy. In general you shouldnâ€™t use this as an excuse to not file for bankruptcy, especially if itâ€™s imperative to your financial future.
Considering the above information, if bankruptcy is the best option available you, you should not let potential embarrassment prevent you from taking back control of your life and your finances. Always exhaust all other options before you file for bankruptcy.