Can a Consumer Proposal Affect My Employment? Understanding the Impact on Job Stability 

^{By Elliot Lukacik, Bromwich+Smith staff | Reading time: 6 minutes | 1182 words | Date: 2023/08/03}

We live in a stressful time. Thousands of Canadians are looking for employment, others are struggling to pay their bills, and many are worried about the stigma surrounded with debt and are reluctant to ask for help. We want to explore what the actual impact of a debt relief program like a consumer proposal would have on your employment and job stability. A consumer proposal is one of several debt relief options available to Canadians who are struggling with overwhelming debt.  

Understanding What Is A Consumer Proposal 

A consumer proposal is a formal arrangement made between an individual and their creditors to settle their debts. It is regulated by the Bankruptcy and Insolvency Act and provides a powerful alternative to bankruptcy . Consumer proposals allow individuals to make payments based on their personal situation, including their income level and negotiate a settlement plan that is manageable for their unique situation.  

How a Consumer Proposal Works 

To file a consumer proposal, an individual works with a licensed insolvency trustee (LIT). The LIT will review the individual's financial situation including income and expenses, formulating a proposal, and submitting it to the creditors. The negotiation and settlement process involves creditors voting on the proposal's acceptance. Once approved, the individual follows the agreed-upon repayment plan outlined in easy to manage monthly plans typically over a 5 year plan. If your income level increases, you have the ability to pay off your Consumer Proposal even faster. Once the agreed upon term has been paid in full, all other debt is forgiven essentially allowing the individual to restart their financial journey.  

Benefits of a Consumer Proposal 

Consumer proposals provides an opportunity for debt reduction, allowing individuals to pay only a portion of their debts while having the remaining balance- often 60-80% of the total debt forgiven. Additionally, consumer proposals offer flexibility in repayment terms, enabling individuals to make affordable payments based on their income. They provide an end to creditor phone calls, and an over well improvement to your quality of life.  

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Consumer Proposals and Employment 

Legal Protection 

Consumer proposals come with legal protections provided by the Bankruptcy and Insolvency Act. These protections safeguard individuals' rights in the workplace, prohibiting employers from terminating or discriminating against employees solely based on their participation in a consumer proposal. 

Employment Disclosure 

While it is typically not mandatory, you may consider disclosing your consumer proposal to employers, as transparency can help build trust and maintain a positive employer-employee relationship. Individuals should understand when and how to appropriately disclose this information, ensuring their employer is aware of their financial situation without violating any privacy laws. 

Impact on Current Employment 

You may be worried about the potential impact of a consumer proposal on job security. While there might be initial worries, the legal protections in place generally prevent termination solely due to participating in a consumer proposal. 

Impact on Job Applications 

When it comes to future job applications and background checks, a consumer proposal will show up on any credit check for up to 7 years following filing. Your potential employer will likely consider various factors during the hiring process, and while a consumer proposal might be taken into account, it does not necessarily disqualify you from employment opportunities. If you will be handling large financial transactions, you may want to be honest regarding your consumer proposal before the credit check, to show your trustworthy and forthcoming in this matter. It is important to research and understand how your specific profession or sector might perceive a consumer proposal. 

Job stability is crucial for our financial well-being and overall quality of life. By understanding debt relief options that are available, and the impact they will have in your overall life will help you make an informed decision about your financial future and strive for both debt relief and employment stability. 

Know that debt is not something to be ashamed of. Thousands of Canadians every year look to Licensed Insolvency Trustees like those at Bromwich+Smith to learn about available debt relief programs. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.      

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FAQs: Consumer Proposals & Employment

1: What is a consumer proposal? 
 
A consumer proposal is a formal arrangement between an individual and their creditors to settle their debts, regulated by the Bankruptcy and Insolvency Act. It allows individuals to make manageable payments based on their income level and negotiate a settlement plan for their unique financial situation. 
 
2: How does a consumer proposal work? 
 
To file a consumer proposal, you work with a licensed insolvency trustee (LIT) who reviews your financial situation, formulates a proposal, and submits it to the creditors. Once approved, you follow an agreed-upon repayment plan typically over a 5-year period, and once completed, the remaining debt is forgiven. 
 
3: What are the benefits of a consumer proposal? 
 
Consumer proposals offer debt reduction, allowing you to pay only a portion of your debts while having the remaining balance forgiven (often 60-80%). They provide flexible repayment terms based on your income and put an end to creditor phone calls, improving your quality of life. 
 
4: How does a consumer proposal affect employment? 
 
Consumer proposals come with legal protections that prevent employers from terminating or discriminating against employees based solely on their participation in a consumer proposal. While not mandatory, disclosing the proposal to employers can help build trust and maintain a positive relationship. 
 
5: Will a consumer proposal affect future job applications? 
 
A consumer proposal will show up on credit checks for up to 7 years following filing. While potential employers may consider this, it does not necessarily disqualify you from employment opportunities. For roles involving significant financial transactions, being honest about the proposal can demonstrate trustworthiness. It's essential to research how your specific profession or sector perceives a consumer proposal.  
 
6: Can I still pay off my consumer proposal faster if my income increases? 
 
Yes, if your income level increases during the repayment period, you have the ability to pay off your consumer proposal faster than the agreed-upon term, allowing you to become debt-free sooner. 
 
7: How long does a consumer proposal stay on my credit check? 
 
A consumer proposal will remain on your credit check for up to 7 years from the date of filing. After that period, it will no longer appear on your credit report. 
 
8: Will my employer know about my consumer proposal without my disclosure? 
 
No, your employer will not know about your consumer proposal unless you choose to disclose it. Consumer proposals are private arrangements between you, your creditors, and the licensed insolvency trustee, and they are not publicly disclosed. 
 
9: Can a consumer proposal impact my chances of getting a job? 
 
While a consumer proposal might be considered during the hiring process, it does not necessarily disqualify you from getting a job. Many employers take various factors into account, and a consumer proposal alone may not significantly impact your chances of employment. 
 
10: Are there other debt relief options available besides a consumer proposal? 
 
Yes, there are other debt relief options available in Canada, such as debt consolidation, debt management programs, and bankruptcy. Each option has its advantages and considerations, so it's essential to explore them and choose the one that best suits your financial situation and goals. 

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Author:

Elliot Lukacik, Vice President of Strategic Growth and Business Development at Bromwich+Smith

Elliot is responsible for the creation and execution of the Sales, Business Development and Partnership Growth Strategy for Bromwich+Smith.