Stop Collection Activities With The Automatic Stay
The automatic stay is a powerful order that goes into effect as soon as you file for bankruptcy. The stay prevents most creditors from initiating or continuing collection activities against you. With a few exceptions, as long as the automatic stay is in place, creditors cannot sue you, foreclose on or repossess your property, garnish your wages, send you collection letters, or even call you to collect their debts.
Certain activities, such as the collection of support obligations or criminal actions, can continue to move forward. Learn more about the automatic stay in bankruptcy.
What Happens When You File For Bankruptcy
Filing for bankruptcy will have major repercussions on the rest of your finances. It will discharge you from unsecured debts, which includes credit cards, payday loans, amounts owing to utility companies, student loans under certain circumstances, and tax debt.
The downside is that you will have to sell any non-exempt assets you own to pay off your creditors, as well as 50% of any surplus income over a certain threshold.
Bankruptcy will provide CRA debt relief, but it will come at a cost. Some of the assets that could be liquidated if you declare bankruptcy include:
- Vacation and investment properties that are not your primary residence;
- Secondary vehicles;
- Non-RRSP investments, including TFSAs, as well as RRSP contributions made in the 12 months before filing;
- Jewelry, artwork, collectibles, and other valuables.
In addition to surrendering assets, you will also have to make surplus income payments for 21 months until you are finally discharged from your debts. Surplus income payments are 50% of any net income earned above a certain threshold that depends on the size of your family. It should give you enough to live, but the payments can be considerable depending on your income.
If you owe money to the CRA, bankruptcy will eliminate those debts, but these are all factors to consider. Talk to an insolvency trustee about your options.
Bankruptcy Is A Powerful Tool For Debtors But Some Kinds Of Debts Can’t Be Wiped Out In Bankruptcy
If you’re facing severe debt problems, filing for bankruptcy can be a powerful remedy. It stops most collection actions, including telephone calls, wage garnishments, and lawsuits . It also eliminates many types of debt, including credit card balances, medical bills, personal loans, and more.
But it doesn’t stop all creditors, and it doesn’t wipe out all obligations. For instance, you’ll still have to pay your student loans and arrearages for child support, alimony, and most tax debts. Read on to learn more about:
- what you can expect in both Chapter 7 and Chapter 13
- the benefits offered by Chapter 13 alone, and
- things that can’t be accomplished by filing for bankruptcy.
If you’d like step-by-step guidance through the bankruptcy process, read What You Need to Know to File for Bankruptcy in 2021.
Can Cpp Be Garnished
Because the CRA is more powerful than other creditors like credit card companies, it can garnish both CPP and OAS and all types of pensions. In short, the CRA does not have to abide by standard garnishment rules and can seize some or even all of your monthly CPP earnings. Other creditors cannot seize your CPP earnings directly, but they could potentially access these funds through a garnishment of your bank account where the funds are deposited.
Will My Canadian Student Loans Go Away If I Declare Bankruptcy
If you were a student, either part-time or full-time, less than seven years from the date that you declared bankruptcy, you will have to repay your student loan debt, including the interest charges. Check with Canada Student Loans to learn what they consider to be the last official date you were in school.
If your official last day is under seven years ago, you may still be able to get your student loan debts discharged. You can retain a lawyer and make an application to the court.
You must meet the following requirements:
- You have been out of school for a minimum of five years
- You acted in good faith with regard to the liabilities under the loan
- You have and will continue to experience financial difficulty to such an extent that you will be unable to pay the liabilities under the loan
What Happens To My Debts When I Go Bankrupt In Canada
Home >>How to File Bankruptcy>> What Happens to My Debts when I Go Bankrupt in Canada?
What happens to your debts when you go bankrupt in Canada? Does declaring bankruptcy clear all debts? These are complex topics. The answers depend on the type of debt, and in some cases on your payment status. There are actually some debts that stay , even if you file for bankruptcy.
What Happens To Your Credit Score
Your will fall because of filing bankruptcy; however, this is temporary. The information about your bankruptcy will remain on your report for six to seven years for a first bankruptcy, but this does not mean you have to wait that long to get new credit.
Depending on the reasons you filed, and what your payment history looked like before your bankruptcy, some creditors will offer an existing bankrupt person a credit card. It is almost always possible to get a secured credit card even while bankrupt. Getting new credit is your chance to build a new credit history and show future creditors that you can handle credit wisely.
Many people opt to file a consumer proposal since a consumer proposal can be better for your credit report.
Bankruptcy Exemptions In New Brunswick
- Furniture, household furnishings and appliances up to $5,000
- No limit on clothes for you and your family
- Enough food and fuel for you and your family for three months
- Tools used by you in the practice of your trade up to $6,500
- One motor vehicle up to $6,500, if needed for employment
- Dogs, cats, and other domestic animals belonging to you
- No limit on medical or health aids for you and your family
- Certain government pension plans are exempt from bankruptcy
How To File For Bankruptcy
Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Whether you get that opportunity is up to the bankruptcy court. You can file for bankruptcy on your own, or you can find a bankruptcy lawyer, which most experts regard as the prudent avenue to pursue.
Bankruptcy costs include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees. If you cant afford to hire an attorney, you may have options for free legal services. If you need help finding a lawyer or locating free legal services, check with the American Bar Association for resources and information.
Before you file, you must educate yourself on what happens when you file for bankruptcy. Its not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must follow.
The steps are:
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, you can request a call from a local Licensed Insolvency Trustee.
What Happens When Declaring Bankruptcy
If you’re struggling financially, bankruptcy gives you the opportunity to pay down a portion of your debts over time or have some of them eliminated entirely.
Either way, declaring bankruptcy grants what’s called an automatic stay, which is essentially a block on your debt to keep creditors from trying to collect. They can’t deduct money from your bank account, garnish your wages or go after any of your other assets.
You’ll then have time to work with the court and your creditors to determine the next steps.
Should I File For Bankruptcy Or Default On My Loan
Defaulting on a loan and filing for bankruptcy are not opposite choices. In fact, Fleischman recommends defaulting on a loan before filing for bankruptcy. If you havent defaulted, it might indicate that you havent given yourself enough time to allow your financial situation to improve.
If you do default, then filing for bankruptcy can protect your assets from being seized by creditors. It can also protect you from having future wages or an inheritance garnished. Bankruptcy is useful not only for protecting what you have, but also for protecting your future, Fleischman says.
Duties During Your Bankruptcy
During the bankruptcy period you are required to do the following:
- Provide the trustee with your tax information to file your outstanding tax returns, including the current year;
- Submit each month copies of your pay stubs and proof of other income;
- Attend two credit counselling sessions to help with budgeting, and help you get a fresh start at the end of the bankruptcy;
- Make the required contribution to your bankruptcy estate;
- Surrender any non-exempt assets;
You Can Lose Certain Types Of Property
One of the trade-offs for getting a bankruptcy discharge in a matter of a few months is the requirement to give up certain expensive items. Nonexempt property – the type of property the bankruptcy trustee can sell to pay creditors in a Chapter 7 bankruptcy case – is pretty rare.Â
If you own expensive property you donât want to lose, itâs best to speak to a bankruptcy lawyer. Then youâll know whether thatâs really a possibility and, if so, whether filing Chapter 13 is a better debt relief option for you.Â
Filing Bankruptcy Can Be Expensive
The bankruptcy court charges a $338 filing fee for Chapter 7 cases. If you earn more than 150% of the federal poverty guideline, you have to pay this filing fee. Itâs possible to file your case and pay the fee in up to 4 payments if you canât pay it all at once. But, if you donât pay it in full, your case will be thrown out by the court.Â
If you hire a law firm or bankruptcy lawyer to help you, youâll have to pay their attorney fees in addition to the court filing fees. That usually comes out to an average of about $1,500 that has to be paid before your case is filed. And thatâs on top of the filing fee and the cost of taking the required credit counseling courses.
Depending on your financial situation and the goals you want to accomplish with your bankruptcy filing, hiring the right bankruptcy lawyer for your case can be a great investment. But, a lot of Chapter 7 cases are simple and can be successfully completed without a lawyer.Â
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.
How The Ontario Executions Act Can Help You Save Your Home
In 2015, the Ontario Executions Act was updated to define how much equity you could have in your home that would qualify for an exemption. If you have $10,000 or less of equity in your home, then you are not at risk of losing your home when you file for bankruptcy.
Equity is defined as the current market value of your home, minus the remaining balance on your mortgage, as well as any tax arrears and liens on the property. Lets say your home is worth $200,000. Your mortgage balance is $190,000 and you owe $1,000 in tax arrears, then you have $9,000 worth of equity. In this case, you would not be at risk of losing your home.
On the other hand, if your home is worth $200,000 and the remaining balance on your mortgage is $150,000 and you have no tax arrears, then you have $50,000 worth of equity. Your home would then be at risk of being seized and sold by the bankruptcy trustee.
Its important to consider your home and its equity before you file for bankruptcy. If you have equity in your home, then you may want to explore other options other than bankruptcy. Its in your best interest to avoid filing if youll lose your home.Explore Options to Avoid Bankruptcy
Take Your First Step Towards A Debt Free Life
If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you.
What Happens To Your Income
While your trustee does not seize your wages, bankruptcy in Canada is based on the principle that the more you make, the more you will pay.
Technically this is called a surplus income payment, and this will affect the cost of bankruptcy. If your income is above the government-mandated threshold for your family size, you can avoid surplus income by filing a consumer proposal.
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.
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.
What Happens To Your Bank Account
When the bankruptcy order is made, you must:
- make sure you dont use your bank account
- give your cards and cheque books to the trustee
Your bank account will be frozen. Any money in your account will be an asset and claimed by the trustee. The trustee can ask to release some money:
- for your daily living needs
- to the other person in a joint account
The bank is allowed to use money from one of your accounts to pay your debts on another account you hold with them. This is called set off.
Otherwise, money owed to the bank is a bankruptcy debt, so you cant pay this to the bank directly. The exception is if the bank has a charge on your home .
Open a new account
You can open a new bank account after the date of the bankruptcy order but you must tell the bank or building society that youre bankrupt. Some banks will let you use your old account after theyve spoken to the trustee.
Declaring Bankruptcy: Scary But Sometimes Necessary
It can be hard to admit you need help getting out of debt, or that you can’t do it alone. But that’s why our government has bankruptcy laws to protect not only the creditors, but also individuals. If you have a nerve-racking debt-load, it may be time to face financial facts. Perhaps you’ve been trying to ignore the ringing phone and the pile of unpaid bills that won’t go away.
However, you could be doing yourself a disservice by not filing for bankruptcy. With a good lawyer and the right information, filing bankruptcy could give you the financial footing you need to get a fresh start. In other words, throwing in the towel may just be the beginning you need.
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What Can You Do If You Can’t Find A Licensed Insolvency Trustee
If you are unable to get an LIT to accept your file, or if you cannot afford to hire an LIT, the OSB’s Bankruptcy Assistance Program may be able to help, provided that you:
- have contacted at least two LITs and tried to obtain their services
- are not, and have not recently been, involved in commercial activities
- are not required to make surplus income payments; and
- are not in jail
A creditor is harassing me daily. What should I do?
Although the regulations differ slightly across Canada, there are limits on what creditors and collection agencies are allowed to do. For example, they cannot make telephone calls of such a nature or frequency that they amount to harassment of you or your family. In addition, there are certain times when they are not allowed to call.
Tips for dealing with collection agencies If you feel you are being harassed, contact either an or a qualified and experienced credit counsellor. They can help you by serving as an intermediary between you and your creditor.
and we will send you some information and a list of LITs who participate in the program.
Bankruptcy Exemptions In Newfoundland And Labrador
- Food and fuel required by you and your dependants for 12 months
- Clothing for you and your dependants up to $4,000
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $2,000
- No limit on medical and dental aids for you and your dependants
- Items of sentimental value up to $500
- All pets are exempt from bankruptcy
- Up to $10,000 of equity in your home
- Tools of your trade or business up to $10,000
- Certain income and pension plans
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
Mortgages And Debts Secured On Your Home
Youll need to keep paying your mortgage and any other debts secured on your home – for example, debts secured with a charging order. If you fall behind with the payments, bankruptcy won’t stop your mortgage lender from taking steps to repossess your home.
If you have an income payment agreement or income payment order , tell the official receiver you need to keep paying a secured debt. Ask them if you can pay less under the IPA or IPO so you can keep paying the secured debt as well.
If your home is repossessed and sold, but doesn’t raise enough money to pay off your outstanding mortgage or any other debt secured on it, the remaining debt known as ‘mortgage shortfall’ will no longer be secured. This means you’ll be released from it at the end of your bankruptcy. You’ll also be released from a mortgage shortfall if your home is sold at any time, even after your bankruptcy has ended.
Your Cra Debt Options
If you are having CRA debt issues, speaking with a licensed insolvency trustee to help review your options is the first step. They can see what the best solution is for you, which may include a consumer proposal or a bankruptcy. When successfully entering into either a bankruptcy or a consumer proposal, this stops any further actions against you by the CRA.
If you owe the CRA money, dealing with CRA tax debt should be your top priority. Not only can the agency use widespread collection actions, but it can also withhold GST and Child Tax credits or even remove money from your bank account leaving you out of luck when it comes to meeting other obligations like mortgage payments.
Dont delay if you find yourself in tax debt. There is a solution to all types of debt.
If you live in the GTA, book a free consultation with the caring professionals at David Sklar & Associates. We are here to help assist you in making the best decision for you.
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
What Happens After Filing For Bankruptcy In 2021
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In a Nutshell
Knowing what happens after you file bankruptcy can make it seem less intimidating. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Eliminate Most Types Of Debt
The reason most people file for bankruptcy is to wipe out debt. When you receive a bankruptcy discharge, it extinguishes your liability to pay back many types of obligations, such as credit card debt, medical bills, and personal loans.
But not all debts can be discharged in bankruptcy.
Common examples of nondischargeable debts include:
- recent tax obligations
- alimony and child support
- student loans , and
- debts obtained by fraud.
Learn about debt discharge in Chapter 7 and discharging debt in Chapter 13.
What Bankruptcy Can Do
Bankruptcy allows people struggling with debt to wipe out certain obligations and get a fresh start. The two primary bankruptcy types filedChapter 7 and Chapter 13 bankruptcyeach offer different benefits and, in some cases, treat debt and property differently, too. You’ll choose the chapter that’s right for you depending on your income, property, and goals.
Here are some of the things you can expect regardless of whether you file for Chapter 7 or 13.