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How Do You Claim Bankruptcy In Canada

What Happens After Bankruptcy

How long does bankruptcy last in Canada?

Once your bankruptcy is discharged your debts will be cancelled . A note about your bankruptcy will remain on your credit report for a minimum of six years after the date of discharge. In most circumstances, your bankruptcy will be discharged in 9 months.

This means that for most people their debts are cancelled 9 months after filing for bankruptcy and they can start going through the process of rebuilding their credit. Your trustee can help you here as well by providing effective strategies for getting your credit back on track and helping you manage your money.

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What If I Have Very Little Equity

If you have recently mortgaged or re-financed your home, you may have very little equity in it . If this is the case, there is a chance you can keep your home, and continue your mortgage payments, if you can find a way to pay this amount into the bankruptcy through other means. This is a matter you can discuss with a Licensed Insolvency Trustee for clarification.

What Happens Once You File For Bankruptcy

Once your bankruptcy is filed, there is an immediate stay of proceedings. This means that unsecured creditors cannot begin or continue lawsuits, wage garnishees, or even contact you to request payment.

Within five days of the bankruptcy starting the trustee will send a copy of the bankruptcy paperwork to creditors, so they can file a claim.

The trustee will file outstanding tax returns up to the date of bankruptcy. Any outstanding taxes or penalties owed CRA will be included.

You will have certain obligations that you will have to fulfill including a monthly income statement and attending credit counselling sessions.

  • Filing bankruptcy immediately halts most creditors from taking your wages.
  • Your Trustee will deal with your unsecured creditors on your behalf.

Read Also: How To File For Bankruptcy For Credit Card Debt

Your Creditors May Hold A Meeting

Sometimes, a meeting of creditors is required or requested. The purpose of this meeting is to

  • allow creditors to obtain information about the bankruptcy;
  • confirm the appointment of the LIT;
  • appoint up to five inspectors to supervise the administration of your estate; and
  • allow creditors to give direction to the LIT.

If a meeting is called, you will be required to attend.

Dip Into Retirement Funds

Can You Declare Bankruptcy Twice In Canada

Planning for your retirement is important, but if borrowing some funds now can significantly benefit your situation, its worth speaking to a professional about it. Using retirement investments can help you avoid the consequences of filing bankruptcy, but its important to weigh the pros and cons of dipping into your retirement funds to pay off your current debts though the rate of return on many investments is often much lower than the interest on credit card debt.

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Consider A Consumer Proposal

What are your options if you have declared bankruptcy in the past, and you have new debts? To avoid the additional costs and consequences of filing bankruptcy more than once you could consider a as a way to negotiate a settlement with your creditors. You will avoid a repeat bankruptcy but still find a solution to your current financial problems.

If you find yourself facing the possibility of filing bankruptcy a second or third time, and ask them about your alternatives.

How Long Does Bankruptcy Last

Bankruptcy lasts approximately 9 months, provided that it is your first bankruptcy and you complete all of the duties assigned to you. Your bankruptcy may last up to 21 months if you have to pay surplus income, which is calculated according to standards established by the Office of the Superintendent of Bankruptcy Canada and coordinated by your trustee after examining your income, expenses, and dependents in your household.

If it is your second bankruptcy, you will be bankrupt for 24 or 36 months. If you have been bankrupt more than once previously, have not complied with your duties, or have committed one or more bankruptcy offences, your bankruptcy timeline will be determined by the court.

After you have received an Absolute Discharge from your bankruptcy, you will no longer be responsible for any of the discharged debts. However, the fact that you filed a bankruptcy will appear on your credit rating for 6 to 7 years, depending on the province you live in.

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Requirement : Asset Value

The final requirement is where things become the most complicated. The Licensed Insolvency Trustee will compare the total value of your assets to your total amount of debt. If the value of the assets you have exceeds your debt, you wont qualify. You must owe more than you can afford to repay if you sold everything.

Your Personal Bankruptcy Is Complete Achieving Full And Final Settlement And Forgiveness Of Your Debts

How Long Does Bankruptcy in Canada Last? MUST SEE!

Upon completion of your bankruptcy duties, you will receive an official Certificate of Discharge showing that you have completed the requirements to successfully exit from personal bankruptcy and begin your financial life anew, debt-free.

The debts that were included in your bankruptcy will now be written-off and forgiven by your creditors.

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Signing A Bankruptcy Petition

To file for bankruptcy protection, you sign various bankruptcy forms, including an Assignment and a Statement of Affairs. In your bankruptcy assignment, you state that you are handing over your property to the Licensed Insolvency Trustee for the benefit of your creditors. The statement of affairs is a list of all your assets and liabilities.

You will also be required to answer several questions about your situation including details about your family, work, and disposition of assets before bankruptcy.; It is an offence under the Bankruptcy & Insolvency Act to sell or hide assets from your creditors when you know you intend to go bankrupt.

With the advent of COVID-19 and the required social distancing, it is now possible to file bankruptcy online by video-conference and electronic signature. However, you must still file with a trustee in the province where you live or where most of your assets are if you live outside of Canada.

Are You Considering Filing For Bankruptcy We Can Help

Being unable to meet your expenses or facing lawsuits for unfulfilled financial obligations is a tough situation to be in and one that you think you cant get out of. Bankruptcy Canada understands your predicament and is committed to helping you resolve your debt issues.;

If youre looking for an effective debt relief solution that is best for your financial situation, Bankruptcy Canada can help. Our knowledgeable and highly experienced Licensed Insolvency Trustees will thoroughly evaluate your financial condition and recommend a solution that will best meet your needs. Meanwhile, also feel free to go through our extensive database of relevant articles to find the answers youre looking for.;

To consider your options and take the next step towards debt relief, contact us by submitting a short form and one of our Licensed Insolvency Trustees will get in touch with you within 24 hours.

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When Should Someone File For Bankruptcy Rather Than Taking Other Debt Reduction Measures

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If you find that your debts are more than you can handle to repay within the time periods allotted by your creditors, it may make sense to consider filing for bankruptcy or a consumer proposal. Consumer proposal is a less damaging route, but it is expensive and still lowers your credit score. You may have to remain in consumer proposal for up to five years while you pay off the remaining debts, but this process can be sped up by applying for a consumer proposal loan. This loan pays off your creditors which allows you to exit consumer proposal early and helps you rebuild your credit score by reporting your monthly payments to Canadas credit agencies.

The decision to file for bankruptcy is a personal one. For instance, if you have an annual household income of $150,000, you may be able to handle $100,000 in unsecured debt. However, if your annual household income is only $60,000 because the breadwinner is on maternity leave, then handling $100,000 in unsecured debt may be tough and you might find yourself on the brink of filing for bankruptcy.

I cant emphasis enough the importance of speaking with a Licensed Insolvency Trustee. Although you may think that bankruptcy is your only choice, a Licensed Insolvency Trustee may be able to come up with alternative arrangements to help you avoid bankruptcy.

How Does Bankruptcy Affect Your Credit Score

What You Keep Or Lose In Bankruptcy in Canada: Infographic ...

An important consequence of filing for bankruptcy is the negative impact on your .

However, this does not mean that you will never be able to borrow again.

A bankruptcy filing results in an R9 credit rating on your credit report. This will remain on your report for six years after youve been discharged from bankruptcy.

An important part of your financial recovery during the bankruptcy process is devoted to credit counselling and money management. You will learn how to budget, set financial goals and manage credit so that you avoid debt problems in the future. These important tools will help you improve your credit.

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Should You Claim Bankruptcy

A good trustee does not assume declaring bankruptcy is what you should do. The goal of talking with a Licensed Insolvency Trustee is to discuss your personal financial situation and debts. Your trustee will look at the big picture. Something that is hard to do when you are avoiding calls from collection agencies and trying to figure out how to make your next bill payment.

If;filing bankruptcy;in Ontario is the right solution for you, your trustee will fully explain the process and answer any further questions you may have.

At Hoyes, Michalos and Associates we are proud to be a team of understanding professionals who can help you decide if personal bankruptcy is the right solution to deal with your debts.

How Does Bankruptcy Work Steps 1

Learn the basics about how bankruptcy works in Canada with this guide. Find out about the rules and process of how to file or apply for bankruptcy in order to eventually be discharged.

The bankruptcy process in Canada is a big step and not one to take lightly. Once you assign yourself into bankruptcy, it is extremely difficult to change your mind.

Do yourself a favour and make sure that you have explored alternatives to bankruptcy before you decide to go bankrupt. Applying for bankruptcy will impact your life in many ways. No matter how difficult your money problems may seem today, something this important with long term consequences that you might not be fully aware of, is worth considering carefully.

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Filing Documents And Notifying Creditors

Your trustee will file the forms electronically with the federal government after youve signed them to confirm their accuracy. Youre then considered to be bankrupt once these forms have been filed with the Official Receiver. At this point, your Trustee should receive a notification and you should get a file number.

Your Trustee will then notify your creditors about the bankruptcy filing, so that they can file a claim. These notifications are most often sent electronically, so it shouldnt take long for your creditors to find out and for the collection calls to stop. Likewise, if your wages are being garnished, your trustee should notify your employer to stop the garnishment.

The Trustee will also be responsible for filing any outstanding tax returns you may have up to your bankruptcy date. Any money that you owe to the Canada Revenue Agency will be included in the bankruptcy.

What Debts Can Be Included

Claim Bankruptcy = No More Mortgage Canada

Bankruptcy includes most debts that are unsecured or without collateral. Examples of unsecured debts are:

  • Potential loss of non-exempt assets
  • Note on credit report for up to 7 years
  • Monthly payments based on income
  • Monthly budgeting statements
  • Some debts are excluded

There are consequences to filing for bankruptcy, but many are misunderstood and can actually hinder someone from exploring their debt relief options. Lets;take a look;at;some of;these;consequences in more detail.

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Select A Licensed Insolvency Trustee To Help You Understand Canada’s Debt Regulations

Licensed Insolvency Trustees are the only people licensed by the Canadian Superintendent of Bankruptcy to administer consumer proposals and bankruptcies.

In order to declare bankruptcy or file a consumer proposal vou must work with a Licensed Insolvency Trustee.

Your trustee will provide information about consumer proposals, the process for filing bankruptcy, and about other debt relief options. Also, during the bankruptcy or proposal process your trustee will ensure your rights are respected.

When selecting your trustee, you should keep the following in mind:

  • Your trustee should be local or at least easy to access.
  • You should feel comfortable with your trustee. Ask them questions about your situation and make sure you understand their answers.
  • Confirm they are licensed by the Superintendent of Bankruptcy .

must work with a Licensed Insolvency Trustee when filing bankruptcy in Canada.

Here on Bankruptcy-Canada you can find and connect with one of the top Licensed Insolvency Trustees that is local to you. We list only Trustees who have shown a long standing ability to help people find debt relief.

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What Assets Can I Keep If I Go Bankrupt

It is important to know that when filing for bankruptcy you do not lose all of your assets. Bankruptcys purpose is to help you get out of debt, and leave you in a better position financially.

Upon making the assignment into bankruptcy, all unencumbered assets vest in the Trustee, meaning the Trustee can sell these assets to increase the payment available to your creditors, subject to certain Federal and Provincial legislation.

Some of the more common assets and how they are dealt with in the bankruptcy are as follows:

Assets exempt from seizure from the Trustee:

  • Employer Pension Plans
  • RRSPs
  • Self-directed RRSP contributed over 12 months ago
  • Life insurance policies
  • Personal effects such as clothing to a maximum exemption amount of $5,650 per family
  • Household furniture to a maximum exemption amount of $11,300 per family
  • Tools of the trade used to earn income to a maximum exemption amount of $11,300
  • Automobile maximum of one unencumbered vehicle to a maximum value of $5,650

Assets available to your Trustee for seizure:

  • RESPs
  • Stocks and bonds, Canada Savings Bonds, and publicly traded shares
  • House equity on your personal residence
  • Recreational equipment, including but not limited to boats, trailers, and snowmobiles
  • Self-directed RRSP contributions made in the 12-month period prior to bankruptcy

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How To File Bankruptcy: A Step

Bankruptcy provides protection from creditors and a fresh start for your finances, but there are a number of steps to follow. To file for bankruptcy in Canada, you will need all the information about your financial situation such as credit card statements, bank statements, mortgage records, and loan documents. After that, you will contact a Licensed Insolvency Trustee to either begin the bankruptcy process or consider alternative remedies.

I Will Not Be Able To Get Future Credit/buy A House

Can You Claim Bankruptcy On Student Loans In Canada

As stated earlier, bankruptcy is intended to be rehabilitative in nature, not punitive. It would not be fair to punish someone forever for filing a bankruptcy, so the record of it stays on your credit report for six;years following discharge for first-time bankrupts. After that, it is gone. Your ability to buy a house will always be governed by your financial circumstances: your income, your assets, your spending and obligations. Many former bankrupts have been taught budgeting by their Trustee as part of the process and are now, of course, debt-free. So on paper, as long as they have the downpayment, many look pretty attractive as a lending risk. Even while the bankruptcy is still on your report;when you apply for a mortgage, most still get approved in our experience. CMHC will guarantee a mortgage within three years of your discharge from bankruptcy depending on your financial situation.

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Not All Debts Can Be Included In Bankruptcy Student Loans Secured And Non Secured Debts

Another reason why you may not be able to file for bankruptcy as a way to eliminate your debt is if you have debts that cant be included in bankruptcy. Student loans, secured debts, and even some non secured debts may fall into this category. By not including certain debts, this means that the amount of debt youre declaring bankruptcy on is less than what you may have thought. If that is the case, you need to decide if filing for bankruptcy is really the best option for your situation.

How Does Bankruptcy Affect My Credit Rating

Bankruptcy will remain on your credit report for 6 years after discharge. Bankruptcy can affect how future lenders view your creditworthiness, but this impact is temporary. While your credit score will drop immediately after filing, you can often get a secured credit card while bankrupt. This will be reported on your credit report as new, and positive, credit history. After your bankruptcy, you can apply for additional credit lines and you will see a slow and steady improvement in your score.

Bankruptcy also has the advantage of ridding you of debts that are causing your current financial hardship. Falling behind on payments and having past due bills sent to a collection agency if you cant repay your bills will also negatively affect your credit score and can be hard to overcome without bankruptcy if your debts are large.

The purpose of filing bankruptcy is to gain a fresh financial start. Eliminating debt means you can begin the process of;rebuilding your credit;after bankruptcy and create a stronger financial future. If you take the right steps to rebuild, you will see your score rebound.

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