Personal Bankruptcy In Canadaknow How Bankruptcy Works And Get Info On Your Other Options
Before you file for personal bankruptcy, its important that you get the facts needed to make an informed decision. There are also other options which may work for you.
Filing for bankruptcy should always be a last resort. It costs money to go bankrupt and the process to be discharged from bankruptcy takes time. Even if you do end up choosing bankruptcy, why not do so knowing that it truly is your best option? Explore the many alternatives to bankruptcy to find out.
Should I Declare Bankruptcy
While every financial situation is different, the following signs are a strong indicator that you may need to consider filing for bankruptcy:
- Youre receiving harassing phone calls from creditors
- Youre borrowing money to pay bills
- Your credit cards are always at their limit
- Your credit score is plummeting
- Your debt load grows larger every month
- Financial stress is severely affecting your quality of life
Before you decide to declare bankruptcy, be sure to speak with a Licensed Insolvency Trustee. Your Trustee will review your financial situation to assist you with determining if bankruptcy is the best path forwardor if an alternative solution makes more sense.
How Will Bankruptcy Affect My Spouse
Unless you and your spouse have jointly held debts where they have specifically co-signed , there will generally be no impact to your spouse if you declare bankruptcy.
One spouse filing bankruptcy does not automatically mean that their spouse is also in bankruptcy, nor will a bankruptcy shift responsibility for the unpaid debts from one spouse to the other.
In the event your spouse is a co-signer, co-borrower or co-cardholder and you file bankruptcy, your spouse would remain responsible for repaying the full balance of the joint debt, less any funds that creditor receives as part of your bankruptcy. If unaffordable, your spouse may wish to consider their options for addressing their debts and seek advice from a Licensed Insolvency Trustee.
A Licensed Insolvency Trustee can assist you in exploring options to manage your debts and whether bankruptcy or another solution may be ideal for your specific situation, as well as that of your spouse.
Definition For Bia Insolvency Counsellor
BIA Insolvency Counsellor means an individual registered by an LIT with the OSB and for whom the LIT is accountable, whom the LIT may assign to provide insolvency counselling on a specific insolvency filing in fulfillment of the LIT’s duties pursuant to subsection157.1 and paragraph 66.13 of the Act, and in accordance with Directive 1R6 Counselling in Insolvency Matters.
Meet With Your Trustee
This will occur at your trustees office or online during the pandemic. The trustee will explain all options available to you. He or she will ask about your income, your assets, how much you owe, and what your expenses are.
You should also ask questions as well, including how to start, what the costs are, when to make payments, what assets you may have that would qualify for exemption and any other questions you have.
At the end of the meeting, if you decide to move forward, the trustee will file the bankruptcy application and all the necessary paperwork with the Office of the Superintendent of Bankruptcy Canada.
Once it is filed, the trustee will begin overseeing the legal obligations for your bankruptcy. You will stop making payments and any legal action against you, including wage garnishment, will end. Unless a meeting of creditors is requested, you will skip to Step 5.
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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
How To File For Bankruptcy In British Columbia
When youre facing overwhelming debt, its easy to get discouraged and feel like there is no way out of your financial situation. But the good news is, there are debt relief options available to help you turn things around. In many cases, the best way to eliminate debt is to declare personal bankruptcy. Though there is sometimes a stigma surrounding this process, there absolutely shouldnt be. Many individuals who file for bankruptcy are honest, hard-working people who file as a last resort after years of struggling to pay their bills. Their financial difficulty may be the result of a divorce, the loss of a job, a failed business venture, a serious illness, or even a family emergency. The idea behind personal bankruptcy is to permit an honest person in an unfortunate situation the option to eliminate their debts and focus on building a brighter financial future.
Smythe Insolvency is here to help guide you through the process, so you can learn how to file for bankruptcy in British Columbia. Our team is here to answer any questions you have and will ensure the process goes smoothly. Please reach out to us today for more information.
What to Expect When You File Bankruptcy
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How Can I Rebuild My Credit After My Bankruptcy In British Columbia Is Done
Several factors will determine how quickly you rebuild credit after your bankruptcy in British Columbia is done and, in turn, your ability to borrow money.
First, if you are currently an undischarged bankrupt, it will be nearly impossible to get a loan. However, if you have been discharged from bankruptcy, a lender may consider your application. It will be more difficult to borrow in this case than if you were never bankrupt. Lenders will also look at how long you have lived at your current address, your work history, your monthly income, and whether you have any security for the loan. They may require a co-signor.
Here are several suggestions for repairing your credit after bankruptcy:
You cant repair your credit right away, but if you continue to save money, and follow the steps listed above, you can gradually rebuild your credit after your bankruptcy in British Columbia in done.
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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Bankruptcy Exemptions In Manitoba
- Furniture and household appliances up to $4,500
- No limit on clothing for you and your family
- Food and fuel necessary for you and your family for six months, or the cash equivalent
- Tools of your trade up to $7,500
- One motor vehicle up to $3,000 when used for business or transportation to work
- Articles and furniture necessary to perform religious services
- No limit on health aids for you or your family
- If you are the sole owner of your home, up to $2,500 in equity is protected if you co-own your home, the limit is $1,500
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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Types Of Bankruptcy Discharge
- Absolute Discharge The person in bankruptcy no longer owes any of the debt filed in the bankruptcy form
- Conditional Discharge The person in bankruptcy must pay additional money over a defined set period. When that ends, they may grant an absolute discharge.
- Suspended Discharge The person in bankruptcy will experience a delay in the absolute discharge date.
- Refused Discharge The person in bankruptcy is does not get a discharge because of a court action.
How Bankruptcies Work In Canada
Your bankruptcy begins when you file for bankruptcy with a Licensed Insolvency Trustee , as they are the only professionals in Canada that are licensed and regulated to administer bankruptcies. Your trustee settles all of your debts by paying the proceeds of your non-exempt assets to your creditors. A non-exempt asset is an asset that exceeds the equity limit set by your province. For example, if the value of your motor vehicle exceeds the limit set by your province, then your trustee can sell your car to repay creditors.
Alternately, if you would like to keep an asset that exceeds the exemption limit, you can make an arrangement with your creditors to buy back the asset by paying off the amount that exceeds the exemption limit.
Each province provides a list of exempt assets that you can keep regardless of the fact that you declared bankruptcy. While you are bankrupt, you will likely be required to make monthly payments to your trustee.
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What Does Discharged Mean
Discharged means your bankruptcy has ended you no longer have to pay your debts and you are able to apply for credit. However, if you do not complete your duties during bankruptcy, you will not get discharged, your trustee will close your file, and creditors can resume collection efforts against you. To learn more about how to get out of bankruptcy, read about how long bankruptcy lasts in Canada.
What This Means For Your Rdsp
The court did not rule that all RDSPs are exempt from seizure. The court made its decision not to release the funds to the trustee based on the facts of this case. It is apparent that this means future cases will be dependent on the Courts ability to exercise its discretion. In the absence of clearer legislative exemptions in the Bankruptcy & Insolvency Act, Licensed Insolvency Trustees will also likely exercise discretion in whether to seek court direction about the release on any RDSP funds to the estate.
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Who Needs To File For Bankruptcy
When youre facing a significant financial burden, it can be difficult to know when its time to seek professional assistance. You may attempt to carry on, making what payments you can as others fall by the wayside. The first thing you need to do in order to find a way out of debt is to recognize your financial problems are beyond your control, meaning youre at a point where its simply not possible to pay off your debts. While every persons situation is different, there are some telltale signs that its time to consider other options, like bankruptcy. Being honest with yourself and realizing your debt is not a problem you can overcome on your own is the best thing you can do. You may want to consider filing for bankruptcy if you meet any of the following criteria:
- You are regularly unable to make payments when they are due
- You can barely afford your minimum payments each month
- You have credit cards that are maxed out
- You are making bill payments by taking credit card cash advances
- Your creditors have passed your account over to collection agencies, and youre being harassed by creditor calls
- You have been sent a notice of legal action that your creditors are attempting to collect the money you owe
- You are living pay cheque to pay cheque
- Your creditors are garnishing your wages
- You are borrowing money from friends and family
Which Assets Can You Keep When Filing Bankruptcy
In most cases, the following assets are what you may keep when filing bankruptcy in Canada:
- Your home, provided it has equity of less than $10,000
- A car or motor valued to a provincial limit
- Personal belongings and clothes
- Furniture, food, and tools in your house
- Some types of agricultural property
- Any RRSP, RRIF, RESP, and DPSP savings
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You Will Be Discharged From Bankruptcy
A discharge releases you from the legal obligation to repay the debts you had as of the date you filed for bankruptcy, except for specific types of debts that are excluded by law. These include alimony and child support payments, student loans , court-ordered fines or penalties, and debts arising from fraud.
The timing of your discharge depends on a number of factors, including whether this is your first bankruptcy, and whether you are required to make surplus income payments.
Timing of your discharge from bankruptcy
If this is your first bankruptcy and you are not required to make surplus income payments , you will be eligible for an automatic discharge from bankruptcy in nine months. If your surplus income is higher, your bankruptcy will be extended to 21 months and you will be required to make payments from your surplus income.
Your discharge from bankruptcy will happen automatically if
- the discharge is not opposed by the LIT, a creditor or the Office of the Superintendent of Bankruptcy
- you have attended the mandatory financial counselling sessions and
- this is your first or second bankruptcy.
To ensure that a greater percentage of debts is repaid to creditors, the following standards set out when an automatic discharge will occur.
|Surplus income is greater than $200 per month||36 months after filing|
Bankruptcy Prior To A Final Divorce Order
In British Columbia, the right to a share in family property is a right in respect of the actual asset itself. For example, you and your ex have the right to equally split your family home . But in a situation where you are left with all the debts, then it would make sense that you would ask for more on the assets, possibly 100% of the assets i.e. the family home. This would bring fairness to the situation as you had no control over your spouse declaring bankruptcy and transferring the joint debts on you solely. Bankruptcy of a spouse is a factor a court can consider under section 95 of the BC Family Law Act when deciding whether to order that one person have more or less of the property.
To learn more about the best or worst times to declare bankruptcy during separation or divorce, read this.
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Schedule A Free Bc Bankruptcy Consultation With A Licensed Insolvency Trustee
You can call a local trustee in your area to have your financial situation assessed by a government licensed trustee.
The trustee will meet with you to discuss your financial situation and then the trustee will explain all of your possible options, including personal bankruptcy.
Your trustee might also suggest a consumer proposal or will be able to help you avoid bankruptcy and a proposal altogether.
If you and the trustee decide that BC bankruptcy is the right choice for your money problems, the trustee will cover everything that personal bankruptcy involves.
The trustee will cover the required payment you will have to make each month, how long your bankruptcy will be, the duties you will be required to complete, and the impact of bankruptcy on your spouse, family and credit rating.
The trustee will answer all of your questions about BC bankruptcy, and will ensure that you are comfortable with starting the process.
Can I Keep My House And My Car Under Canadian Bankruptcy Rules
Bankruptcy should not impact your secured debts, such as a vehicle lease or a mortgage, as long as you continue to make payments and there is no equity in your secured assets.
In most provinces, you do not lose your house or car when you declare bankruptcy. You can work out arrangements with your trustee and creditors to keep the asset and continue paying the mortgage or loan. Learn more about what assets you can keep in bankruptcy.
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Bankruptcy Exemptions In Nunavut:
- No limit on household furniture and appliances
- No limit on clothes for you and your family
- No limit on medical or dental aids
- Enough food and fuel for 12 months
- No limit on hunting tools or tools of the trade
- Up to $35,000 of equity in your home
- Certain pensions and life insurance policies
Ontario bankruptcy exemptions
You may be afraid that you will lose everything if you file for bankruptcy, but this is not the case in Ontario. Here are the provincial bankruptcy exemptions that allow you to keep certain assets and possessions.