Contact Us For More Information About Bankruptcy
If you would like more information about bankruptcy in Canada and arent sure if its the right option for you, please contact us for help. One of our , will be happy to answer your questions and review your situation. We are a 100% free and confidential service and you are under no obligation. You can book an appointment with us and the counsellor will review your whole financial situation and give you objective, non-judgemental guidance to help you resolve your situation. The sooner you contact us, the sooner we can help relieve your stress and worry. Call us at , , or chat with us online right now.
Fortunately, for many people who feel this way, there are other less severe options. Speak with one of credit counsellors to learn all your options. Theyll be happy to carefully review your whole financial situation with you and answer any questions you may have. Speaking with our certified counsellors is always free, confidential and without any obligation. Were here to help.
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.
What Happens When You File For Bankruptcy A Second Time
Legally speaking, a person can file for bankruptcies as many times as they want. However, the process becomes more restrictive.
With a second bankruptcy, you will not qualify for an automatic bankruptcy discharge in nine months. Bankruptcy will last from 24-36 months, depending on whether or not you have surplus income.
A trustee will ask the court to hear your application for discharge. The court will decide the terms of your discharge, including how long you will be in bankruptcy and whether you are required to continue making payments into bankruptcy. A creditor can also oppose your bankruptcy discharge which could result in your bankruptcy lasting longer and possibly costing more.
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Does Bankruptcy Take Care Of Any Tax Money I Owe To The Canadian Revenue Agency
Many people assume that income tax debt is not dischargeable in bankruptcy. However, in a bankruptcy, your debt to the CRA is treated the same as any other unsecured debt, such as credit cards or lines of credit. After filing for bankruptcy, all interest and collection activity by the CRA will stop. Additionally, your trustee will communicate directly with the CRA on your behalf.
What Happens After Bankruptcy
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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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.
Pros And Cons Of Claiming Bankruptcy
The best and most desirable effect of claiming a bankruptcy in Ontario, is that it gives an individual with overwhelming debts the opportunity for a fresh financial start. It does this by eliminating debt, stopping collection calls and ending wage garnishment orders.
However, not all debts can be eliminated. It is very important to ensure that you know which of your debts will be absolved before declaring bankruptcy.
Bankruptcy is also not without some consequences. While the pros of claiming bankruptcy means that your debts will be eliminated, you need to balance this against any cons of bankruptcy including any assets you may lose and the effect on your credit score.
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Myth No 7 You Can Max Out Credit Cards & Then Go Bankrupt
Quickly making a few large purchases to max out credit cards and then declaring bankruptcy will jeopardize working with a bankruptcy trustee and/or being discharged from the bankruptcy process. Creditors may also oppose a persons application to be discharged from their bankruptcy, possibly leaving them in a very difficult situation. Your trustee and your creditors play an important role in helping you obtain your discharge.
What Can You Keep During Bankruptcy
Many people are afraid to file for bankruptcy because they fear that they will have to give up everything they own. However, that isnt the case. There are quite a few exemptions when it comes to bankruptcy.
You will be able to keep an unlimited amount of clothing. Whats more, you will be able to keep your car or truck if it is paid for and its value is less than $6,600. If your vehicle is security for a loan, you may keep it as long as you continue making payments. Youll also be permitted to have $13,150 worth of home furnishings and appliances.
Bankruptcy wont interfere with your ability to earn a living, but there are limits to how much you are allowed to earn during a bankruptcy. These limits depend on your family size. For a single-person household, the monthly income limit is $2,152. For larger families, the limits are:
- 2-member family: $2,679
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Exemptions In British Columbia:
- No limit on clothing for you or your dependents all clothing is exempt from bankruptcy
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $5,000 unless you are behind on child support payments, in which case the limit is $2,000
- Work tools and work-related property up to $10,000
- No limit on medical and dental aids for you or your dependents
What You Need To Do During Bankruptcy
Your trustee will handle all of the paperwork and filing involved with the bankruptcy process. However, you still have some obligations. One of your duties during the bankruptcy process is to provide your trustee with all of the tax information that is requested. This will be used to file any outstanding tax returns. In addition, you will be asked to submit any pay stubs or proof of income that you have each month. You will also be asked to surrender any non-exempt assets that you possess.
Your trustee will be able to guide you regarding what is exempt and what is not. You will need to make a minimum monthly contribution to your bankruptcy estate, usually about $200. This contribution is to cover administrative, mailing and filing fees.
You will also have to attend two credit counseling sessions when you are going through the bankruptcy process. These sessions are designed to help you learn some useful budgeting tools that can be used once you are on the other side of the bankruptcy tunnel. Most people end up enjoying these sessions and learning a lot.
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Personal Property Security Act
The sole purpose of bankruptcy is to get rid of your unsecured debts.
These debts include various loans, credit card debts, and anything that isnt secured.
A secured debt is one where you have put something up as collateral.
Your asset acts as security to ensure you pay the debt.
A good example of this is a car loan where your car is collateral.
Fail to pay the debt, and your creditor can claim the car to cover the costs.
The PPSA is important as it demands that creditors register an interest in your secured assets.
This means that, if you wanted to sell the asset to raise money during your bankruptcy, they could step in and take the asset themselves.
But, if they dont register an interest on the PPSA system, then theyre not entitled to take it.
Consequently, your Licensed Insolvency Trustee must take responsibility and conduct a search of the PPSA system during the bankruptcy proceedings.
This prevents instances where you attempt to sell something, and a creditor flags it up and steps in to claim the asset.
Schedule A Free Debt Assessment
Still have questions? See our Personal Bankruptcy FAQ page or contact us for a free consultation. We are happy to answer any questions you have about filing bankruptcy over the phone or by email.
Hoyes, Michalos has helped over 60,000 individuals file a bankruptcy or consumer proposal since 1999. Our licensed bankruptcy trustees always take the time to answer any questions you have about how to file for bankruptcy and how bankruptcy will affect you and your family. Contact us so we can help you make a plan to be debt free.
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Farming Fishing And Aquaculture Exemptions
- If your primary occupation is farming, personal property used by you to earn income are exempt up to $10,000
- If your primary occupation is fishing, personal property used by you to earn income are exempt up to $10,000
- If your primary occupation is aquaculture, personal property used by you to earn income are exempt up to $10,000
Northwest Territories bankruptcy exemptions
In the Northwest Territories, property exempt from seizure in bankruptcy is set out in the Exemptions Act and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have household furniture and equipment in your home worth $5,000 and you do not owe any outstanding loans on these items, the equity you have is $5,000. In the Northwest Territories, the exemption for the total of these items is $5,000. In this case, you would be entitled to keep these possessions and your creditors cannot take them from you.
Exemptions For Your Home
In British Columbia, homeowners exemptions are higher if you live in Vancouver or Victoria. In this case, $12,000 of the equity in your home is protected in Greater Vancouver and the Victoria capital area. Elsewhere in the province, $9,000 in home equity is exempt from bankruptcy. For more information on bankruptcy exemptions in British Columbia, speak to a local Licensed Insolvency Trustee.
Manitoba bankruptcy exemptions
In Manitoba, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have a car worth $8,000 and you still owe $5,000 on the loan, the equity you have in the car is $3,000. In Manitoba, the exemption for a car is $3,000. In this case, you would be able to keep the equity in your car your unsecured creditors cannot take this from you when you file for bankruptcy.
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Your Lit Prepares A Report To The Osb If Required
In certain circumstances, the LIT prepares a report regarding your application for discharge and submits it to the OSB. Although this report is not usually required, it can be helpful to the bankrupt if, for example, you were convicted of an offence under the Bankruptcy and Insolvency Act, or your conduct before or after bankruptcy might influence the court to refuse your discharge. It gives the LIT an opportunity to further describe your financial situation and analyze the various details of your bankruptcy, including the reasons for filing, and can give further details about your conduct.
What Happens To Your Spouses Credit Or Assets
If your debts are your own, your spouse is not affected by your bankruptcy. Your bankruptcy does not appear on their credit report.
If you have joint debt, your creditor will pursue your spouse for collection. In this case, you may want to talk to your trustee about a joint bankruptcy.
Only your share of any assets you own is included in your bankruptcy. If you own any assets jointly, such as a marital home, it is essential to discuss options with your trustee. Again, a consumer proposal may be a more viable alternative in this scenario.
If your spouse, or anyone, co-signed a loan for you, they are still liable for repayment of any debts forgiven to you in your bankruptcy.
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Will The Bankruptcy Trustee Take My Home
This is a complicated question, as the specific answer will vary according to your individual circumstances and the amount of equity in your home.
However, generally the answer is: If you dont have significant equity in your home, then claiming bankruptcy should not affect your house.
More detailed information is available in our article about how a house is treated in a bankruptcy.
How Do I Declare Personal Bankruptcy
In Ontario, a bankruptcy is a legal process that can only be filed through a federally Licensed Insolvency Trustee. By filing bankruptcy you:
- receive immediate protection from your creditors,
- stop wage garnishments and other legal action and
- begin the process of eliminating your debts.
If you are considering declaring bankruptcy in Ontario, your first step should be to contact a trustee for a free initial consultation. They will help you consider all of your debt relief options including ways you can avoid bankruptcy.
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Pursuing Claims In Bankruptcy
Just because a debtor is bankrupt , does not necessarily mean creditors will not recover amounts owing from the debtor. This is particularly true for employees who may have super-priority claims in a bankruptcy for unpaid wages and pension contributions. Proving your claim and the ranking of your claim versus other creditors is the central focus for effectively pursuing claims in bankruptcy. Below is a brief overview of the bankruptcy process in Canada.
Bankruptcy
Generally, any insolvent person who has no other way to meet his or her financial obligations may file for bankruptcy. In a bankruptcy, a corporation or person who can no longer pay their debts, gives all of their non-exempt property to a Trustee in Bankruptcy who then sells the property and distributes the available funds to creditors. Bankruptcy can be voluntary, or forced by a creditor through the Courts. Once a debtor is declared bankrupt, all legal proceedings are stayed absent the Courts permission.
Proof of Claim Form
Meeting of creditors
It is important to file your Proof of Claim prior to the First Meeting of Creditors, as this allows the creditor to: vote on a resolution examine the Proofs of Claim of the other creditors or require the production of bankrupts books or documents. The creditor may also vote by proxy by providing the Trustee with a completed proxy form.
Distribution
a) CRA Trust Claims
b) certain employee super-priority claims
c) secured claims
e) unsecured claims.
Claim Bankruptcy In Ontario: Our Assessment
We had to deal with two problems one financial and one emotional. Dr. X was an emotional wreck as a result of the failed business venture with all of its problems. We actually had to deal with that first. It is normal for a licensed insolvency trustee to take a holistic approach. The debtor facing financial problems always needs two outcomes: a solution that will allow them to shed their debts and get piece of mind and become rehabilitated.
We advised Dr. X that a personal bankruptcy was not the answer for her. We told her that she first had to shut down her clinic. She had to deal with the employees to make sure that they were paid up to the last date work their normal wages and vacation pay. They also needed to get their Record of Employment and T4 Statements as quickly as possible. Unfortunately there was no money for pay in lieu of notice.
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What Happens After You File For Bankruptcy
Your bankruptcy is complete when you receive your Notice of Discharge from your Trustee. At that point, you will be free of the unsecured debts that were included in your bankruptcy. You can begin to rebuild your credit.
A notation about your bankruptcy will remain on your credit bureau report after the date of discharge. This is usually removed automatically after six years. Even while the bankruptcy is still noted on your report, you may be able to get credit from certain lenders. You can help this along by taking active steps to rebuild your credit. Your Trustee can give you advice on getting a new start.
What Forms Do I Sign To Declare Bankruptcy
When filing for bankruptcy in Canada, you will have to sign at least two forms. One is an Assignment, and the other is a Statement of Affairs. In the bankruptcy assignment, you state that you are handing over all of your property to the bankruptcy trustee for the benefit of your creditors. The statement of affairs is a list of your assets, liabilities, income, and expenses. You will also have to answer several questions about your family, employment, and disposition of assets. Before signing, make sure you understand the legal documents that are part of the bankruptcy file. Although the trustee prepares them from the information you provide, they are your statements. You are responsible for the accuracy of their content. Once these documents have been filed with the Official Receiver, you are legally bankrupt, and, at this point, the bankruptcy process cannot be reversed without a court order. Keep copies of notices and all other bankruptcy documents the trustee sends you.
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