What Happens When You Declare Bankruptcy In Quebec

How To Keep An Inheritance You Know You Will Receive While Bankrupt

If you are bankrupt and believe you are going to receive an inheritance, you may be able to keep the inheritance by having the bankruptcy annulled.

You may be able to annul the bankruptcy if you:

• File a consumer proposal: If you file a consumer proposal that has payment terms based on you receiving the inheritance, this would annul the bankruptcy.

• Apply to the Court: If you know the inheritance exceeds the value of your debts, you can apply to Court to have the bankruptcy annulled.

• Make an informal proposal to your creditors to repay a portion of the debt from the inheritance. The creditors may agree to take less than the full amount they are owed and write-off the remainder of the debt.

Meet The Bankruptcy Trustee

The trustee is an important part of filing bankruptcy. The trustee will deal with creditors on your behalf and handle the legal side of things.

Its your job to find and select a bankruptcy trustee.

You can select the trustee you want to work with and although you will pay their fees you dont really hire a trustee as they technically dont work for you or represent you through the bankruptcy process.

The trustee does the following: administers the bankruptcy process; helps you complete the required forms; sells your assets and deals with creditors on your behalf.

Many Canadians seem to think that bankruptcy trustees are like defence lawyers or civil servants.

Its true that they are licensed by the Office of the Superintendent of Bankruptcy . But they are independent businesses.

They advertise and need to find clients. You need to find and select your own .

They will also charge you an upfront fee.

As such, some are better than others and they view the bankruptcy insolvency act differently and this can have a dramatic impact on how your bankruptcy will play out.

We have a list of trustees across Canada that weve found to be fair, empathetic, and equitable. We are NOT bankruptcy trustees, so we are happy to share the ones weve found to be excellent.

What if I cant afford to file bankruptcy?

Many Canadians begin thinking about filing bankruptcy. But soon they realize that the fees and loss of assets is a significant obstacle.

Bankruptcy trustees will charge you fees;

How Many Times Can You Apply For Bankruptcy

Technically, there is no law against filing or applying for bankruptcy as many times as you want. However, any more bankruptcy filings after your third are unlikely to be accepted/discharged. Remember, your third bankruptcy involves asking a court to discharge you, so if you go back for a fourth, there is a good chance they will refuse to give you a discharge. Because of this, it is best not to file more than twice, if you can help it.

Want to know if you can file for bankruptcy online in Canada? Find out here. ;

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What Are My Alternatives To A Bankruptcy In Quebec

While bankruptcies are common, there are other alternatives that might be a little less extreme and still could work for your unique situation. If you are having trouble paying your bills and are thinking that you may need to apply for bankruptcy, here are some other things to consider:

• Work on a budget that might free up enough money to pay off your debts

Bankruptcy Is The Only Solution To Your Financial Difficulties

In some cases, a debt consolidation or a consumer proposal can be the best option. Still not widely known about, the consumer proposal is an offer you make to all your creditors to reimburse part of your debut with no interest within a maximum five-year timeframe. With these alternative options, a Licensed Insolvency Trustee can help you choose the best solution after analyzing your financial situation.

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How Much Does Bankruptcy Cost In Quebec

During your bankruptcy, there are monthly payments that you will have to make to your Licensed Insolvency Trustee. These payments vary depending on your financial capacity. The amount payable varies from file to file depending on several factors such as income, seizable assets, etc.

For a first-time bankruptcy, the monthly payments vary between $ 150 and $ 200 for the duration of the bankruptcy. When you have people who are financially dependent on you, the amount is reduced. If you have special expenses like health care costs or child support costs, it will influence your monthly payments.

If you have specific questions regarding your situation, do not hesitate to contact us.

What Happens After Bankruptcy

Once you legally file for bankruptcy, your creditors should no longer phone you or sue you and any existing garnishees are lifted. An appointed Licensed Insolvency Trustee will distribute money to your creditors from your non-exempt assets and surplus income. The bankruptcy process typically lasts between 9 and 21 months.

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Your Assets Will Be Sold

Next, your assets will be reviewed and non exempt assets will be sold by the trustee. Some assets are exempted by provincial and federal laws .

The money raised from liquidating your assets will be put in a trust for your creditors.

Will you lose your house to bankruptcy?

Bankruptcies generally do not affect the rights of secured creditors. Mortgages are secured debts. This means that you wont necessarily lose your home and if it is deemed that there is no equity in your home. If there is no equity in your home, you will be allowed to keep the home and continue to pay the mortgage.

However, if you have a poor payment history on your mortgage and the mortgage lender feels there is a highy possibility of future default the bankruptcy may allow them to take legal steps to take ownership of this asset.

It also varies by province. As an example, in Alberta, the first $40,000 in home equity is exempt.

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

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What Assets Can I Keep In Bankruptcy In New Brunswick

• Furniture, household furnishings and appliances used by the debtor or a dependent to a realizable value of $5,000 or to any greater amount that may be prescribed
• Food, clothing and fuel necessary for the debtor and his family for 3 months
• Two horses and sets of harness, two cows, ten sheep, two hogs and twenty fowl, and food therefor for six months
• Necessary tools, equipment and books to the value of $6,500 used in the practice of the debtors trade or profession
• Necessary seed grain and potatoes required for planting purposes to the following quantities: forty bushels of oats, ten bushels of barley, ten bushels of buckwheat, ten bushels of wheat and thirty-five barrels of potatoes
• One motor vehicle having a realizable value of not more than six thousand five hundred dollars at the time the claim for exemption is made, or not more than any greater amount that may be prescribed, if the motor vehicle is required by the debtor in the course of or to retain employment or in the course of and necessary to the debtors trade, profession or occupation or for transportation to a place of employment where public transportation facilities are not reasonably available
• Necessary medical and health aids
• Pets belonging to the debtor
• Pension plans
• Registered Retirement Savings Plans , Registered Disability Savings Plans and Registered Retirement Income Funds are exempt from seizure

For further details on what you can keep, book a free consultation with a Licensed Insolvency Trustee.

Avoid Bankruptcy By Communicating With Creditorsget Help To Stop Collection Calls

There are a lot of situations where once a creditor is fully aware of someones circumstance, they no longer actively attempt to collect what is owed. There are effective ways to communicate with creditors to ask them to help you, which will stop collection calls. After the statute of limitation has been reached, a debt can no longer be legally collected.

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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

I Made An Advance Payment To A Company That Has Declared Bankruptcy What Can I Do

If you pre-paid for a service, you become a creditor and the LIT will send you a Proof of Claim form with your creditor’s package. Follow the instructions on the form and in the package, and make sure you have all of the required documentation proving that the debtor owes you money.

To be recognized as a creditor and to be eligible to share in the distribution of dividends, if any, you must provide the LIT with a completed Proof of Claim.

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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.

Discharge hearing

About Licensed Insolvency Trustees

• Discussing your options with a Licensed Insolvency Trustee

In a bankruptcy, people or companies who can no longer pay their debts give all of their non-exempt property to a Licensed Insolvency Trustee who then sells it and distributes the money to creditors. Bankruptcy can be voluntary or forced by a creditor through the Courts.

Roughly 90 percent of bankruptcies in Canada are consumer bankruptcies where the business-related debts make up less than 50;percent of the bankrupt’s total debts.

When the bankrupt’s realizable assets do not exceed $15,000, the bankruptcy may be processed under summary administration. Almost all consumer bankruptcies are processed this way.

Bankruptcies processed as summary administrations are simpler; for example, they don’t require a meeting of creditors. If your debtor’s bankruptcy is to be handled as a summary administration, you will find a notation saying so near the top of the documents you receive.

As soon as the debtor is declared bankrupt, creditors can no longer start or continue legal proceedings against the debtor without the Court’s permission.

If you are a secured creditor, however, you can take possession of the asset on which you hold a security unless the Court, under certain conditions, orders otherwise. For example, a bank holding a security on a car may take possession of the car and sell it even if the debtor has declared bankruptcy.

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Lottery Winnings Or Inheritances

If you win the lottery or receive an inheritance after youve filed, but before youve been discharged from bankruptcy, that money must be given to the LIT, who will distribute it to your creditors. If the amount youve received is greater than the debts you owed, you can keep whats left after your creditors have been paid off.

Myth No 1 Bankruptcy Is An Easy Way Out

;is not an easy way to get out of your;financial problems;or to fix your credit. The reality is that when a person;files for bankruptcy;it is recorded on their;;and stays there for over 6 years. During this time, it will be very difficult to obtain credit. Bankruptcy also has a huge emotional cost. Feelings of shame and regret can remain with a person long after the information has been removed from their credit report.

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Costs And Fees For Bankruptcy In Canada

In Canada, the cost of bankruptcy is at least $1,800. This;fee is payable to the trustee for their time. It also includes administration services and the costs associated with filing the appropriate bankruptcy forms with the Court. How much a trustee may charge for their services is determined by the Office of the Superintendent of Bankruptcy .

Am I Liable For My Spouses Debts If They Declare A Personal Bankruptcy In Quebec

No. Rest assured, you will not have to follow him or her in bankruptcy. Marriage or common-law partnership does not commit you to become the endorser of your spouse and the only debts you will have to pay will be those where you are jointly liable. Unless the majority of debts are joint, you do not have to declare bankruptcy and you are not liable for your spouses debts.

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Report Your Income And Expenses

The Office of the Superintendent of Bankruptcy determines how much income your family can maintain a reasonable standard of living.

Each month, youll need to submit pay stubs and report all monthly expenses.

Did you get a raise? Or are you picking up extra shifts?

This may be considered surplus income. You will need to submit this extra income to your trustee. They may keep a percentage of this extra income and distribute it to your creditors.

Reporting your income during bankruptcy

Youll be required to report your income and expenses each month during bankruptcy. The bankruptcy trustee essentially takes control of your finances during this period.

The OSB determines how much income a family needs to maintain a reasonable standard of living. If your income exceeds this amount, you will have to pay certain amount to the trustee.

What Happens When You Declare Bankruptcy In Canada

In Canada, only a Licensed Insolvency Trustee can file the paperwork for a bankruptcy. 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.

And now the good news. Once bankruptcy is filed, there is an immediate stay of proceedings. This means unsecured creditors can no longer contact you, and cannot begin or continue lawsuits or wage garnishees.

Your Trustee will file your outstanding tax returns up to the date of bankruptcy. Any money you owe Canada Revenue Agency will be included in the bankruptcy, so you will no longer owe this money after you complete the bankruptcy. Any tax refunds or GST credits that arrive while you are bankrupt will go to the Trustee for your creditors.

During your bankruptcy, you must fulfill certain duties, such as:

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Debts Discharged In Bankruptcy

When you file for bankruptcy, you give up some of your assets in exchange for having some of your debts erased. But you may be surprised to hear that filing doesnt get you off the hook for all debts. Generally speaking, youll no longer be responsible for unsecured debts, but youll usually still be accountable for secured creditors and debts.

With a few exceptions, all your unsecured debts will be forgiven, regardless of the discharge date. Debts that will be discharged in bankruptcy include:

• Personal consumer loans
• Other unsecured loans and lines of credit such as payday loans, past-due medical bills and insurance premiums
• Past unpaid utility bills
• Student loans

Essentially, you wont owe anything on these debts once they grant your discharge.

Take Care Of Your Responsibilities

Once you file bankruptcy officially, you must:

• attend two counselling sessions
• file regular reports on your income and expenses
• pay costs, including equity in assets, surplus income, administrative fees, and taxes, which your LIT files.

After nine months, assuming this is your first bankruptcy and you dont have surplus income, you will be eligible for discharge. This means you no longer owe anything to the creditors listed on your bankruptcy.

A note on accepting pay raises during bankruptcy: During your bankruptcy, you must submit reports on your income and expenses. Accepting a raise could bump you over the current standard for your household, which would mean you may have to make surplus income payments. While this may not be ideal, its in your interest to accept any increase in pay, even though some of the new funds may go to pay your creditors. Only 50% of your new additional earnings can go towards payments to creditors. The other 50% is yours to keep, income and other taxes notwithstanding. Youll want to keep that for savings or investments.

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