The Bankruptcy Process Explained By a Licensed Insolvency Trustee

Bankruptcy ProcessOur licensed insolvency trustee wrote this page to explain the step by step process of going bankrupt. Before you decide to file bankruptcy, your Trustee will help you understand the entire bankruptcy process. Your Trustee will help guide you through the entire process and will ensure you get your discharge from bankruptcy as quickly as possible.

The steps in the bankruptcy process are as follows:

Step 1: Decide that you need professional assistance for your debts.

You should be proud you have made this decision and take pride in the fact you have decided to take control of your debt.

Step 2: Meet With a Government Licensed Trustee.

Bankruptcy Canada has a list of Trustees in every province and territory. Our Trustees offer a free consultation to discuss your options. For some people there could be a bankruptcy alternative, while for others the Trustee might recommend filing bankruptcy. Your Trustee will explain all of your options and the pros and cons of each.

Step 3: Fill Out the Application Paperwork

If you have made the decision to file bankruptcy, your Trustee will provide you with the application paperwork. You will fill out this paperwork, which takes about 20 minutes to fill out, with the help of someone at the Trustees’ office.

Step 4: File Bankruptcy

After you have filled out the application form the Trustee will review the document and then prepare the bankruptcy documents you need to sign to officially file bankruptcy. Once you have signed all the necessary documents, your Trustee will file the documents with the Office of the Superintendent of Bankruptcy (OSB) electronically. Once you have been declared bankrupt, your creditors cannot contact you, garnish your wages, or have a collection agency contact you.

Step 6: Your Trustee Notifies Your Creditors

The Trustee also notifies your creditors of your bankruptcy electronically.

Step 7: A Meeting of Creditors is Called (in Rare Cases)

A meeting of creditors is rare in a consumer bankruptcy although your creditors may request such a meeting. The purpose of a meeting of creditors is to give your creditors a chance to learn more about your financial situation and give direction to your Trustee.

Step 8: Sale of any Non-Exempt Assets

If you have any assets that are not protected by the bankruptcy exemptions you will have to surrender these assets to the Trustee. The Trustee will then hold these assets in trust until they are ready to sell these assets to distribute the funds to your creditors.

Most bankrupt debtors keep all of their assets when filing bankruptcy.

Step 9: Complete Your Bankruptcy Duties

During the time you are bankrupt you will be required to complete your bankruptcy duties in order to get your bankruptcy discharge. Duties include making payments to your Trustee, reporting on where you are living, your income and monthly expenses, and attending two counselling sessions.

Step 10: Receive Your Bankruptcy Discharge

Once you receive your discharge from bankruptcy your debts will be discharged (eliminated) and you will have your fresh start. All unsecured debts, with a few minor exceptions, will be eliminated. Your secured debts, and any debt you incurred during the bankruptcy, will not be eliminated.

To learn more about the bankruptcy process in your province or territory please contact a local Bankruptcy Canada Trustee.