Personal Bankruptcy in Canada
By filing for personal bankruptcy a person who is hopelessly trapped in debt can get a fresh start to their finances.
If you are suffering from a severe personal money problem, such as high levels of credit card debt, you might be thinking of bankruptcy as a solution to your debt problem.
If this is the case you should not be ashamed or embarrassed as over 100,000 Canadians just like you have sought debt relief through bankruptcy or a consumer proposal.
A proposal is the most popular bankruptcy alternative and gives individuals a chance to repay a portion of the debt they owe over a period of time that will last up to 5 years.
A debtor can also make a one time “lump sum” payment so they can begin rebuilding their credit as soon as possible.
What is Bankruptcy?
Personal bankruptcy is a legal process with a basic premise: You assign your non-exempt assets to your Trustee in exchange for your unsecured debts being eliminated.
Bankruptcy law allows you to keep certain assets and the Trustee will not tell you how to spend your pay cheque during the bankruptcy.
As a legal process bankruptcy is governed by a federal law known as the Bankruptcy & Insolvency Act.
Once you have filed for bankruptcy you will receive protection from your creditors through the automatic stay.
The automatic stay is a legal protection that stops wage garnishments, lawsuits and even prevents your creditors or collection agencies from contacting you.
When Should I Consider Personal Bankruptcy?
There are many causes of bankruptcy in Canada although there are certain causes that are more common:
- An unexpected financial expense;
- An accident or illness that leads to medical bills and lost income from time off work;
- Student loan debts;
- Unhealthy credit habits;
- Loss of income.
If you are in need of a fresh financial start, it might be time to consider filing for bankruptcy. Bankruptcy provides a quick and relatively easy way to get out of debt in a quick and easy manner.
The decision to file for personal bankruptcy can be difficult but with the assistance of a Trustee, you can be confident if you decide to go ahead and go bankrupt.
Please contact our team today to arrange a personalized, no-charge consultation to get answers to your personal bankruptcy questions. Our team is here to help you!
Am I Eligible to File for Bankruptcy?
You must have lived or done business within Canada in the last 12 months and be insolvent in order to file for personal bankruptcy.
To be insolvent means that you owe more than $1,000 and are unable to meet your debt payments as they become due.
How Long Does Bankruptcy Last in Canada?
Most personal bankruptcies in Canada last for 9 months, at the end of which you will receive an automatic discharge. In certain circumstances, your bankruptcy will be extended. If you have been bankrupt before, you have surplus income, or you do not complete your bankruptcy duties then you will be bankrupt longer.
A record of your personal bankruptcy filing will remain on your credit report but you can begin rebuilding your credit as soon as you have received your bankruptcy discharge.
What Debts Are Discharged in Bankruptcy?
Almost all of your unsecured debts will be erased by filing personal bankruptcy. Certain debts such as child support, alimony payments, fines, debts obtained through fraud, and student loans if you have not been out of school for at least 7 years.
What Can I Keep?
When you file bankruptcy you do not lose everything. In fact, many debtors that go bankrupt keep all of their assets. If you have significant assets then the Trustee will likely recommend a consumer proposal, as you will be able to keep all of your assets in a proposal.
Each province and territory has a list of assets you are able to keep, which are known as “bankruptcy exemptions.”
What is Surplus Income?
If your monthly income is over a certain level set by the government for your family size you will be required to pay a portion of your excess income – “surplus income” – to your Trustee.
If you earn more the premise is that you should be able to afford to pay your creditors more.
Is Bankruptcy Right For Me?
To learn more about filing bankruptcy and how it will impact you and your debts you can book a free consultation with a Licensed Insolvency Trustee. There’s no risk or obligation, and the consultation is confidential so you don’t have to hesitate in contacting a Trustee in your area. The Trustee is licensed by the Government, you are not obligated to use the Trustee’s services if you decide not to, and the final decision is up to you.
Is Personal Bankruptcy My Only Solution?
No, personal bankruptcy is not the only solution. In fact, the Trustee can provide a full range of debt solutions that they will help you explore before recommending bankruptcy.
A Trustee will only recommend bankruptcy if they feel there is no other solution that will be adequate for your situation.
There are several bankruptcy alternatives that you can take advantage of in certain cases:
- Getting a debt consolidation loan;
- Making a debt management plan;
- and if you have enough income, making a consumer proposal.
To learn more about personal bankruptcy please don’t hesitate to contact a Trustee for your confidential evaluation today!