Filing For Chapter 7 Bankruptcy
There are lots of reasons people file for Chapter 7 bankruptcy. You’re probably not the only one, whatever your reason is. Some common reasons for filing for bankruptcy are unemployment, large medical expenses, seriously overextended credit, and marital problems. Chapter 7 is sometimes referred to as a “straight bankruptcy.” A Chapter 7 bankruptcy liquidates your assets to pay off as much of your debt as possible. The cash from your assets is distributed to creditors like banks and credit card companies.
Within four months, you will receive a notice of discharge. The record of your bankruptcy will stay on your credit report for ten years. But even that doesn’t have to mean doom. Lots of Chapter 7 filers have bought homes with recent bankruptcies on their record. For many people, Chapter 7 offers a quick, fresh start.
But Chapter 7 bankruptcies aren’t right for everyone. Almost all assets are taken and sold to repay creditors. If a debtor owns a company, a family home, or any other personal assets which he or she wants to keep, Chapter 7 may not be the best option.
Ontario Bankruptcy And Insolvency Statistics
- 38,856 consumers in Ontario were insolvent in 2018
- 38% of those consumers went on to declare bankruptcy
- Average assets at the time of filing: $30,774.14
- Average liabilities at the time of filing: $98,577.12
- With an average household income of $74,287 in Ontario, the average filer effectively owed $1.33 for every dollar they earned
Bankruptcy Basics: When Should You File For Bankruptcy
Sometimes, there’s no other option than to file for bankruptcy. But before you do, make sure to assess your situation accurately.
Bankruptcy is a scary proposition. The word “bankruptcy” itself sounds so ominous. The media bombards us with nightmare tales of seemingly solid business giants going from bedrock to bankrupt. Gossip columns never tire of dishing on the latest celebrity inches from bankruptcy. You might even fear that you’re a few steps from going under. But, just how can you tell when it’s time to throw in the towel and declare bankruptcy?
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Is Bankruptcy The Only Solution When Youre Overindebted
No, there are alternatives to bankruptcy. Here are a few of them:
- Consumer proposal;
A consumer proposal is a settlement offer to your creditors to repay part of your debts and/or repay the debts over a longer period of time, for a maximum period of 5 years. Thats why its sometimes called a proposal to creditors, even though thats not the official name. For more information, click here.
- Debt consolidation
Debt consolidation means combining all of your debts and paying off a single loan. Its a way of simplifying your finances. From this point on, you make one payment a month. The interest rate is also lower than on the debts owed to your previous creditors. For more information, click here.
- Voluntary deposit
This is an agreement with the court where you commit to paying back your debt to your creditors. Its an alternative to bankruptcy or a consumer proposal. Your advisor will let you know if this is the right solution for you. For more information, click here.
Will I Lose Everything If I Declare Bankruptcy
No, rest assured. Some of your assets cannot be seized by your creditors, this includes your furniture, RRSPs, RRIFs, any other fund invested in a retirement vehicle , work tools needed to carry out your professional activity, to name a few. Often, under certain conditions, even your house and car are not seized by the creditors.
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Youll Probably Get To Keep All Of Your Stuff
Folks in more than 95% of all Chapter 7 bankruptcies filed in the United States keep all of their belongings. Thatâs because the law protects certain property – called exempt property – from your creditors. Whether thatâs your monthly social security check, your watch, or your kitchen table, if itâs protected by an exemption, you get to keep it.Â;
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How To File Bankruptcy In Ontario
You are eligible to declare bankruptcy in Ontario if you live, do business or own property in the province. You must owe more than $1,000 in unsecured debt. If you meet these criteria, then you follow this bankruptcy process:
Get A Free Debt Assessment
To start the bankruptcy process, first, you contact a Hoyes, Michalos & Associates licensed insolvency trustee who will assess your financial situation and explain the debt relief options available to you, including bankruptcy and alternatives to bankruptcy. After that, if you still want to declare bankruptcy, the trustee will help you complete several bankruptcy forms for signing. You are considered a bankrupt only when the trustee files the bankruptcy paperwork with the Official Receiver.
Rules pertaining to declaring bankruptcy and the bankruptcy process allow for filing a joint assignment. A joint bankruptcy assignment allows debtors, involved in a close financial relationship, to file for bankruptcy and to see their files dealt with as one file. This is available to debtors if their debts are substantially the same and the bankruptcy trustee believes it is in the best interest of the debtors and creditors.
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Order Of Absolute Discharge
If a court hearing is required, and if you satisfy the court that all duties are completed, the court will issue an Order of Absolute Discharge. After an absolute discharge, you are no longer bankrupt.
There are ;certain situations where the court will not grant an Absolute Discharge Order.
If this is your third bankruptcy, you dont complete your duties, or if your creditor opposes the bankruptcy discharge you will have to attend a court discharge hearing, and the court will then decide on the type of Discharge Order to grant.
At the court hearing, your trustee will let the court know about any relevant details about your bankruptcy.;These details can include information about the creditors opposition or the duties that you didnt complete.
The court will take many factors into account when issuing an order of discharge, including:
- your conduct during your bankruptcy
- your income and bankruptcy payments
- how you got into debt in the first place
- even the education and age of the bankrupt
The court may still grant you an Order of Absolute Discharge, or they can issue an order with conditions, suspend your discharge for a period of time, or refuse your release from bankruptcy outright.
Bankruptcy Exemptions For Farmers
Up to 160 acres of land is exempt if your principal residence is located on that land and is part of your farm. Any personal property necessary for your farming operations over the next 12 months is also exempt from bankruptcy. For more information about bankruptcy exemptions in Alberta, please speak to a local Licensed Insolvency Trustee.
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Cost Of Claiming Bankruptcy In Ontario
When you are considering claiming bankruptcy in Ontario you will want to understand what it will cost. How;much it will cost to go bankrupt depends on a number of factors, including:
- your monthly income,
- the size of your family, and
- whether or not you have been bankrupt before.
These rules are complicated, so we strongly recommend that you contact an Ontario bankruptcy trustee today to arrange for a free initial consultation; they will review your situation and calculate the cost of bankruptcy for you in your situation.
Are Bankruptcy Filings Publicly Available
Bankruptcies are considered a public record, but that doesn’t mean everyone’s going to know about it. Bankruptcy proceedings are filed in a system called Public Access to Court Electronic Records, or PACER for short.
For the most part, it’s more common for attorneys and creditors to use this system to look up information about your bankruptcy. But anyone can register and check if they want to. The service charges 10 cents per page to access case information.
Another way people might find out about your bankruptcy is if your local newspaper publishes public notices.
Finally, employers, landlords and creditors may be able to see on your credit report that you’ve filed bankruptcy when you apply for a job, an apartment lease, or a loan or credit card.
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The Advantages And Disadvantages Of Declaring Bankruptcy
When your debt exceeds your assets and your ability to pay your creditors, bankruptcy can offer you a financial lifeline. Filing for debt relief through bankruptcy can have many advantages and disadvantages. Advantages of bankruptcy protection include:
- A new start that can help you create a healthy financial future
- The ability to retain much, if not all, of your personal property and assets
- Your creditors will be required to cease all debt collection actions
In addition to putting a stop to relentless phone calls and other debt collection efforts, filing for debt relief through bankruptcy can also have disadvantages that you should be aware of. Disadvantages of filing for bankruptcy protection include:
- Filing for bankruptcy stays on your credit profile for 7 to 10 years
- Filing for bankruptcy can lead to higher interest rates when you are eventually able to obtain financing
- You can be ordered to undergo court-approved credit counseling
- You cannot use bankruptcy to discharge overwhelming debt, again, for at least four to eight years, depending on what type of bankruptcy you had filed.
Each individual or business debt load is unique and requires close scrutiny and careful debt reduction planning. Your lawyer can take a clear, objective, and comprehensive view of your financial situation and help you create a plan to reorganize, reduce, or eliminate your debt.
For a legal consultation with a lawyer serving Rutherfordton, call
Pros And Cons Of The Bc Bankruptcy
For many people, bankruptcy in BC seems like the perfect solution. If there is no other way to get out of debt, bankruptcy releases you from your obligations and allows you to start over financially without losing everything. Bankruptcy also enables you to get financial counselling to help you avoid similar problems in the future. Moreover, debt collectors are legally required to stop contacting you once you file for bankruptcy.
On the other hand, there are many reasons why you should pause before you file for bankruptcy. BC residents see their credit suffer for seven years after a bankruptcy is discharged, making it difficult to get new loans and the most affordable rent, mortgage, and interest charges. A bankruptcy will also force you to surrender a great deal of your property. Unless other arrangements are made, you will have to surrender:
vehicle equity over $5,000 home equity over $12,000 in Vancouver and Victoria, and $9,000 elsewhere in British Columbia the value of household items such as furniture minus $4,000 equity in tools of your trade worth over $10,000
Explore Your Bankruptcy Options
Get the financial relief you are entitled to by filing for bankruptcy protection. Our team represents individuals and small business owners in Chapter 7 and Chapter 13 bankruptcy cases. We can also provide help filing for Chapter 11 reorganization bankruptcy and Chapter 12 bankruptcy for family farmers and fishermen.
We can help you through the petition and filing process. We can help you retain your assets when you choose Chapter 7 bankruptcy. We can even help you restructure financial debt through other bankruptcy filings with complex financial structures or extremely large debt loads. Call Farmer & Morris Law, PLLC, at to speak to a member of our client intake team and learn what happens if you declare bankruptcy today.
How Does Declaring Bankruptcy Affect My Credit Rating
It can vary from one credit bureau to the next. But in general, your credit rating will be affected:
- When filing bankruptcy for the first time, for 6 years following discharge.
- When filing bankruptcy for the second time, for 14 years following discharge.
But dont worry. You will still be able to start rebuilding your credit well beforehand. Youll find out how from our experts.
If youve opted for a consumer proposal, your credit rating will be affected for 3 years after you finish paying off the amount promised to creditors.
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Can Student Loans Be Discharged Early
While the seven-year rule applies in the vast majority of cases, a bankruptcy court will consider discharging student loan debt early in extreme cases. You can apply to the court for discharge from student loans in five years.
To qualify for the hardship provision, you must prove that you tried to repay your loans and made use of the assistance programs available. You must also show that even those programs still left behind a severe hardship for you; for example, you cant repay your student debt and buy food or pay rent.
Bankruptcy Exemptions In Nova Scotia
- No limit on clothes for you and your family
- No limit on fuel and food for your family
- Up to $5,000 in household furniture and appliances
- One motor vehicle up to $6,500
- All medical and health aids for you and your family
- Farm equipment, fishing nets, or other tools of your trade up to $7,500
- No limit on grain and seeds or livestock for domestic use by you and your family
For more information on bankruptcy exemptions in Nova Scotia, contact a local a BDO trustee near you.
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Talk To A Financial Coach
You dont have to walk this alone. Read that again: You dont have to walk this alone. Get with a financial coach and talk about your situation. They arent here to judgetheyre here to help.
A financial coach can help you figure out a personalized plan of action for your specific situation. And yes, talking about money can be terrifying, but if you declare bankruptcy, your financial privacy will be out the window immediately. Opening up to a trustworthy financial coach now can help you avoid having to open up to a whole courtroom of people in bankruptcy.
Your Interview With The Official Receiver
If your bankruptcy is approved, youll have an interview with the official receiver. If youve presented your own bankruptcy petition, this may happen directly after the bankruptcy order is made. Alternatively, your letter from the official receiver may invite you to an interview either in person or by telephone. If offered a telephone interview you can ask to be interviewed in person if you prefer.
If you have been made bankrupt by one of your creditors the official receiver may also contact you by telephone to find out if there is anything that needs to be sorted out urgently.
You must attend the interview and cooperate with the official receiver. If you dont, your bankruptcy could be extended beyond the normal 12 months and you could face an examination in court. The more organised you are, the more straightforward the process will be.
Before the interview, telephone the official receiver to confirm or rearrange the appointment; let them know if:
- you require special facilities
- there is anything that needs to be sorted out urgently
- you need more time to gather the paperwork for the meeting
If you have been sent a questionnaire, fill it in, noting anything you dont understand .
Collect together all the paperwork you have been asked to take to the interview or have with you during the telephone call.
Face-to-face interviews may take 2 to 3 hours.
After you arrive:
Telephone interviews take at least 30 minutes.
The examiner will:
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Will Bankruptcy Affect My Job Or Future Employment
Twenty-nine percent of employers run a credit check on new job applicants, according to a survey by CareerBuilder. As a result, declaring bankruptcy could affect your ability to get a new job, especially if that job is in the financial services industry or with a government entity.
They do this primarily to make sure you’re a good fit for the jobssuch as handling moneyand that you’re not financially stressed, which could increase the likelihood of theft or fraud.
If an employer simply runs a routine criminal background check, however, your bankruptcy won’t show up.
It’s less likely that employers would conduct background checks on current employees. So if you’re not planning to switch jobs, you likely don’t need to worry much about a bankruptcy affecting your employment.