How To Claim Bankruptcy In Ontario
Bankruptcy in Ontario can only be filed through a Licensed Insolvency Trustee. The process is not difficult:
The act of filing bankruptcy in Ontario is not without some short and long term negative effects. Hoyes, Michalos & Associates trustees are happy to offer everyone a FREE, no obligation, professional consultation. We will review the details of your individual situation and help you decide if claiming bankruptcy is indeed the correct debt management option for you.
There is no reason to continue living in the downward spiral of overwhelming debts. You do have options, and we are here to help. Simply contact us today.
Rebuilding Your Credit And Finances After Bankruptcy
When the process of bankruptcy is over, your LIT will give you a Notice of Discharge. This notice means you no longer have those debts. You are debt-free at this point, minus any other obligations that were not part of the bankruptcy. That may include secured debts on assets that qualified for exemption, taxes, child support, alimony, and student loans less than seven years old.
Now comes the process of rebuilding your credit and restoring your finances. Youve hopefully learned money management skills and know how to keep your budget. Easy ways to start new credit include secured credit cards and other new credit programs. A secured credit card is when you have an account with a credit card company that is secured by a cash deposit. Your credit limit is equal to the amount you deposit. Always follow and keep your budget. Understand what expenses you have and plan for your wants and needs.
When Should I Declare Bankruptcy
When asking yourself Should I file for bankruptcy? think hard about whether you could realistically pay off your debts in less than five years. If the answer is no, it might be time to declare bankruptcy.
The thinking behind this is that the bankruptcy code was set up to give people a second chance, not to punish them forever. If some combination of bad luck and bad choices has devastated you financially, and you dont see that changing in the next five years, bankruptcy is your way out.
Even if you dont qualify for bankruptcy, there is still hope for debt relief. Possible alternatives include a debt management program, a debt consolidation loan or debt settlement. Each one of those choices typically require 3-5 years to reach a resolution, and none of them guarantees all your debts will be settled when you finish.
The decision shouldnt come down to how long Chapter 7 bankruptcy takes the process itself is only 4-6 months. The thing you have to remember is that bankruptcy carries significant long-term penalties. It is stuck on your credit report for 7-10 years, which can make getting loans in the future very difficult.
The flip side of that is there is a great mental and emotional lift when all your debts are eliminated, and youre given a fresh start.
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Can A Bankruptcy Trustee Fire The Plaintiffs Attorney
The bankruptcy trustee can fire the Plaintiffs attorney and hire one that is preferred by the trustee. The trustee can also decide to settle the matter where the Plaintiff would not previously settle. Chances are that the Plaintiff wont get to keep as much of the settlement had he not filed bankruptcy.
How Often Can You File For Bankruptcy
There is no limit to the number of times you can file for bankruptcy, and no legislated time limit between bankruptcies. However, the length of the bankruptcy and your obligations within the bankruptcy along with the length of time your credit rating will be negatively impacted will increase with each successive bankruptcy. If you file bankruptcy more than twice, the Court will be required to determine how you will be discharged from bankruptcy.Find a local Trustee you can trust. Bankruptcy Canada can connect you with Trustees from coast to coast in Canada including Toronto and Ottawa. Talk to one today.
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Can You Keep Your Home In Bankruptcy
How to save your home DURING bankruptcy. If nothing is done prior to bankruptcy, you can still save your property in bankruptcy. Property automatically vests in a bankruptcy trustee upon their appointment. This means that the co-owner will then benefit from their mortgage payments and any increase in property value.
What Happens After Filing For Bankruptcy
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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.
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What Happens When You Declare Bankruptcy
In Canada, only a Licensed Insolvency Trustee can file the paperwork for bankruptcy. When you declare bankruptcy, you meet with a Trustee to discuss your situation. If bankruptcy seems the most beneficial course, the Trustee will prepare the paperwork to file for bankruptcy. See our page: How to File Bankruptcy.
Once the paperwork is signed, your Licensed Insolvency Trustee will electronically transmit your bankruptcy information to the Office of the Superintendent of Bankruptcy in Ottawa . The Superintendent of Bankruptcy will inform the credit bureaus of your bankruptcy.
Within five days of the bankruptcy starting, your Trustee will send a copy of your bankruptcy paperwork to each of your creditors, so that they can file a claim with the Trustee.
Bankruptcy In The United States
Like the economy, bankruptcy filings in the U.S. rise and fall. In fact, they are like dance partners where one goes, the other usually follows.
Bankruptcy peaked with just more than two million filings in 2005. That is the same year the Bankruptcy Abuse Prevention and Consumer Protection Act was passed. That law was meant to stem the tide of consumers and businesses too eager to simply walk away from their debts.
The number of filings dropped 70% in 2006, but then the Great Recession brought the economy to its knees and bankruptcy filings spiked to 1.6 million in 2010. They retreated again as the economy improved, but the COVID-19 pandemic easily could reverse the trend in 2021. It seems inevitable that many individuals and small businesses will declare bankruptcy.
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Bankruptcy And State Court Lawsuits
If the lawsuit was already pending when the debtor filed the bankruptcy caseâand it pertains to an issue other than a debt that will be discharged in the bankruptcy, as discussed aboveâthe parties have the option of choosing how to go forward. They can:
- dismiss the lawsuit
- ask the bankruptcy court for permission to continue the state court suit, or
- move the lawsuit to the bankruptcy court.
If the debtor filed for bankruptcy before the filing of a lawsuit, the parties can:
- file an adversary proceeding , or
- bring the action in another court after first getting permission from the bankruptcy court.
How Bankruptcy Affects Cosigners And Guarantors
Your bankruptcy discharge only eliminates your obligation to pay discharged debts. It doesn’t affect the responsibility or liability of the cosigners and guarantors on your debts. However, how much protection they will receive when you file depends on whether you file a Chapter 7 or Chapter 13 bankruptcy.
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Should The Heirs Continue The Chapter 13 Case
Whether it makes sense for the heirs to continue with the Chapter 13 case depends on any number of factors, including what will happen to secured property in the bankruptcy estate, whether the heirs can manage to keep the secured property outside of bankruptcy, how much debt the debtor has, how much longer the Chapter 13 case will last, and when the discharge will occur. Below is a discussion of a few of these factors.
Home secured by a mortgage. Under federal law, if a person with a mortgage dies, the lender must work with the deceased’s heirs to change the mortgage into the heirs’ names. If the deceased filed bankruptcy to keep a house out of foreclosure, the heirs must decide if they want to keep the house. If they do, they could continue with the Chapter 13. Or, if they have the means to refinance the home, they could dismiss the Chapter 13 case and refinance.
Other secured debts. If the deceased had other secured debts, such as a vehicle, jewelry, or furniture, and the heirs have the money to purchase and/or the means to refinance, they could dismiss the case and try to work with those lenders outside of bankruptcy as well. Or the heirs could continue on with the case, in order to take advantage of bankruptcy’s treatment of secured debts such as lien avoidance and lien cramdowns, which may allow the heirs to pay less on the debts.
Are You Getting A Refund
Refunds that are issued as a result of returns for years prior to the year of bankruptcy are considered to be the property of the estate in bankruptcy. As a result, these refunds will be sent to the trustee. Any refunds issued in relation to returns for years subsequent to the year of bankruptcy will be sent to you, unless the trustee has obtained a court order.
For the year of bankruptcy, any issued refund related to the pre-bankruptcy return will be sent to the trustee. Issued refunds related to the post-bankruptcy return will also be sent to the trustee if your bankruptcy assignment date is July 7, 2008, or later. Post-bankruptcy refunds that are issued for bankruptcies with an assignment date prior to that will be sent to you, unless the trustee has obtained a court order or has provided us with an Authorization and Direction letter.
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Keep Track Of Your Credit During The Process
Because declaring bankruptcy can affect your credit history and ability to do certain things in the future, it’s important to monitor your credit scores during the process and as you work on recovering from the ordeal.
As you do so, watch how certain actions affect your credit scores and look out for potential errors and negative information that might influence your score negatively. If you do find something that doesn’t belong on your credit report, dispute it with the credit reporting agencies.
As you keep track of your credit score during and after bankruptcy, you’ll learn better how to improve it over time and keep it in a good place going forward.
Want to instantly increase your credit score? Experian Boost helps by giving you credit for the utility and mobile phone bills you’re already paying. Until now, those payments did not positively impact your score.
This service is completely free and can boost your credit scores fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report.
Exceptions To The Discharge Of All Debts
Some debts are not erased. Bankruptcy generally only extinguishes unsecured debts such as those to credit cards, personal loans, income taxes, overdrafts, etc.
A secured debt, such as a car loan or mortgage, may not be included. This is because this type of creditor can recover the amount owing to them via the collateral you posted as security. Your Trustee can advise further if you have a secured loan you want to include in the bankruptcy.Some unsecured debts are also not discharged in a bankruptcy. An example is student loans, if you attended school less than seven years from the date of bankruptcy. Alimony or child support obligations, fines or penalties imposed by the Court, as well as any debt arising from fraud are not discharged in a bankruptcy.
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Understanding Surplus Income In Bankruptcy
Surplus income is any income you make over the amount that the Canadian Government claims an individual or family needs to live. According to the Office of the Superintendent of Bankruptcy Canada , the current income standards in 2021 are:
- $2,248 for a single-person household
- $2,799 for a two-person household
- $3,441 for a three-person household
- $4,178 for a four-person household
- $4,739 for a five-person household
- $5,345 for a six-person household
- $5,950 for a seven-person or more household
Advantages And Disadvantages Of Bankruptcy
If you’re trying to decide whether you should file for bankruptcy, your credit is probably already damaged. But it’s worth noting that a Chapter 7 filing will stay on your for 10 years, while a Chapter 13 will remain there for seven. Any creditors or lenders you apply to for new debt will see the discharge on your report, which can prevent you from getting any credit.
Will The Bankruptcy Trustee Take My Car
In most cases the answer to this question is no, you can keep your car.
Historically, Hoyes Michalos has only repossessed a vehicle in less than 1% of all bankruptcies filed. If your car is leased or fully secured by a car loan, you can usually just continue to make your monthly payments. If you own your car outright or it is mostly paid off, Ontario legislation allows you to keep up to one vehicle worth up to $6,600. Even if your car is worth more than that, we can still provide you with alternatives.
Learn more in our article how to claim bankruptcy and keep your car.
The Chapter 13 Hardship Discharge
After confirmation of a plan, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may ask the court to grant a “hardship discharge.” 11 U.S.C. § 1328. Generally, such a discharge is available only if: the debtor’s failure to complete plan payments is due to circumstances beyond the debtor’s control and through no fault of the debtor creditors have received at least as much as they would have received in a chapter 7 liquidation case and modification of the plan is not possible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge is more limited than the discharge described above and does not apply to any debts that are nondischargeable in a chapter 7 case. 11 U.S.C. § 523.
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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|
What Happens When A Defendant Files For Bankruptcy In The Middle Of Your Civil Lawsuit
You have filed your civil lawsuit and have begun your legal proceedings in order to obtain damages from defendant however, now you have been informed that the defendant has filed for bankruptcy, now what?
When a defendant files for bankruptcy in the middle of litigation that can put a halt on your civil case, or at the very least a temporary stop. The person filing bankruptcy is provided an order called an automatic stay, which bars creditors from pursing them during their bankruptcy case. Meaning your civil case will stop while they proceed in their bankruptcy case. Often the bankruptcy will discharge almost all their debts, there are a few exceptions such as family support debts and student loans.
Generally, this will stop your civil case against defendant however, there are a few instances where you can continue your case against defendant. If you receive notice that they have filed bankruptcy it is important to look at what kind of bankruptcy they filed, either a chapter 7, 11 or 13, and to move quickly as there are strict deadlines to follow regarding any future filings.
The other option is to file an adversary claim against the defendant in the bankruptcy court within the allotted provided under the bankruptcy code.
What is an adversary proceeding?
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