Will the debtor’s employer find out about the bankruptcy?

office_buildingWill the debtor’s employer find out about the bankruptcy?

An employee can continue to work even though he or she has gone bankrupt. However, where the employee earns a wage which is more than capable of supporting his or her family, then the trustee must request that the bankrupt contribute a portion of his or her salary for the benefit of all the creditors. There is a provision under the Bankruptcy and Insolvency Act which allows the trustee to demand and receive such payment from the bankrupt and the bankrupt’s employer. The trustee is guided by the Superintendent’s standards which is a sliding scale of amounts based on income and the number of dependents.  If the employee disputes the amount of surplus income that should be paid to the estate, then the trustee must submit the dispute to mediation. The mediator is usually an employee in the Official Receiver’s office or someone approved by the Superintendent’s office. The mediator attempts to resolve the dispute and fix a monthly amount that will be agreeable to both the bankrupt and the trustee. If that is not possible, the trustee may apply to the Bankruptcy Court for an order determining the amount of surplus income that should be paid to the trustee.

Even when the consumer debtor’s employer finds out about the bankruptcy, it is illegal for the employer to dismiss the consumer debtor solely on the grounds that the consumer debtor has filed an assignment or that a receiving order has been made.

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