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What Happens When You Declare Bankruptcy

What Happens After You Are Discharged From Bankruptcy

October 7: What Happens After You File Bankruptcy

The day youre discharged from bankruptcy is a new start, all the debts you took into bankruptcy will be gone and youre free to start afresh, but what happens next? Heres how to start getting your finances back on track.

Once youve been discharged youll no longer be bound by the restrictions of your bankruptcy order, but unfortunately, thats doesnt mean all your finances will go back to normal straight away.

Contact Irwin Insolvency Today For Your Free Consultation

With decades of experience offering businesses and individuals across the UK advice on insolvency and bankruptcy, our licensed insolvency practitioners offer impartial expertise that can help you through tough financial times.

If youre weighing up the pros and cons of declaring personal bankruptcy, dont hesitate to contact Irwin Insolvency for your free, no-obligation consultation.

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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

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Before Filing For Bankruptcy

Before you file for bankruptcy, get informed about this debt relief option and the others that may be available to you. Debt settlement programs, for instance, can help you eliminate your debt without forcing you to surrender your assets. Fill out the Canadian debt relief application for more information about your options.

What Happens To Assets In Bankruptcy Will I Lose Everything

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Bankruptcy offers you a fresh start. You are able to keep basic possessions and there are options to keep other assets.

Once you are legally bankrupt, bankruptcy law requires you to surrender your assets to a Licensed Insolvency Trustee. These assets will then be sold and the money earned will be distributed among your creditors.

You dont lose everything. Under Ontario bankruptcy law there is a list of items which are exempt from seizure, when going bankrupt in Ontario. These bankruptcy exempt assets include most of your personal and household belongings and tools used to earn a living and protection in the event your home equity falls below the set threshold .

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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, call

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.

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What Can I Do To Avoid Bankruptcy

Bankruptcy is a last resort option that should be avoided at all costs. Even in instances when debt becomes problematic, there are avenues to explore for preventing bankruptcy becoming necessary.

Examples of which include the following:

  • Contact your creditors as early as possible
  • Rather than waiting for things to hit a crisis point, it isfar better to come clean and discuss your issues with your creditors.Bankruptcy could result in serious losses on their part should your debts bewritten off entirely without recovery. It is therefore in their best interests to help devise a mutuallyamicable plan that benefits both parties.

    • Consider a consolidation loan

    One popular and accessible alternative to bankruptcy is a consolidation loan. This is where one large loan is taken out to repay most or all of your debts, which are subsequently replaced with one affordable monthly payment. Along with reducing the amount you are required to pay each month, a consolidation loan can also significantly reduce the overall size of your debt.

    • Prioritise your debts

    Some debts should always take priority over others, such asmortgage payments, monthly rent payments, council tax payments and utilitybills. This is because the consequences of non-payment can be far more seriousthan defaulting on a mobile phone debt, for example.

    • Seek independent advice

    Are Debt Collectors In Canada Allowed To Keep Calling Me If I Declare Bankruptcy

    What Happens When You Declare Bankruptcy in Canada – BSCC

    Once a bankruptcy claim is filed, all creditors and collection agencies are required by law to stop contacting you. Additionally, a creditor cannot garnish your wages.

    You can continue to receive calls from secured creditors. This applies to a mortgage, lien on a car, or debt for alimony or maintenance.

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    What Happens To My Regular Income If I Declare Bankruptcy In Canada

    Your wages are not affected by your bankruptcy, but part of your duties during bankruptcy includes providing your trustee with your household monthly earnings and expenditures. Additionally, if your income changes or you gain or lose a dependent, you must inform your trustee.

    You may be required to make monthly payments to your trustee. These are called surplus income payments. Your trustee determines whether you have to make surplus income payments based on your average earnings over the bankruptcy and the number of people in your household.

    Watch the video below to learn more about surplus income payments.

    Video transcript: Meet Stephanie, the mother of a young son, James, who is just about to enter Primary School. Recently, Stephanie has overextended her credit and, despite her best efforts, is unable to pay her bills. Realizing that she needed to speak to an expert, Stephanie found a Licensed Insolvency Trustee located in her area and has gone to meet with her. After speaking to the trustee, Stephanie has determined bankruptcy was the most appropriate option for her.

    A Creditor Making You Bankrupt

    Your creditors can present a creditor’s petition if you owe them an unsecured debt of over £5,000. This may be the sum of two or more debts which total over £5,000. There might be different petitioning creditors on the same petition for different debts you owe.

    Once bankruptcy proceedings have started, you must co-operate fully even if it’s a creditor’s petition and you dispute their claim. If possible you should try to reach a settlement before the petition’s due to be heard – doing it later can be difficult and expensive.

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    The Bottom Line On Bankruptcy

    The U.S. Bankruptcy Code exists for a reason — to protect individuals who get in over their heads on the debt front and need relief. Filing for bankruptcy could be the best solution for dealing with your outstanding debt, or it could end up being a mistake you regret. If youre even considering filing for bankruptcy, consulting with a bankruptcy attorney is a good idea because a lawyer can walk you through your options and help you weigh the pros and cons involved.

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    It’s affected 50 Cent, Fazer from N-Dubz, Kerry Katona and pretty much all of the band Blue – among a lot of other celebrities.

    But when we talk about bankruptcy, how many of us actually understand what it means?

    Katie Price is the latest celeb to be declared bankrupt after failing to stick to a plan to repay her debts.

    And after reading this, you’ll know exactly what that means.

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    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.

    You May Lose Your Home

    To pay off a large portion of your debts, you may be required to sell your property to release any equity. This will mean that you will lose your home, so its important to find alternative housing as soon as possible whether that means staying with a friend or relative or speaking to your local authority about re-homing schemes.

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    What Is A Trustee And What Is A Trustees Role

    A Licensed Insolvency Trustee is the only professional who can administer a bankruptcy in Canada.

    Licensed Insolvency Trustees are federally licensed and regulated by the Office of The Superintendent of Bankruptcy. Trustee fees are regulated under the Bankruptcy and Insolvency Act and are moderate, so the cost of bankruptcy is tends to be reasonable.

    Bankruptcy Exemptions On Prince Edward Island

    What Actually Happens When You File For Bankruptcy
    • No limit on clothing for you and your family
    • No limit on medical or health aids
    • Any motor vehicle needed for transportation to work up to $6,500, or up to $3,000 if not used for work
    • Household furniture, utensils, equipment, food and fuel up to $5,000
    • Tools used by you in your business or trade, up to $2,000

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    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.

    Pros And Cons Of Claiming Bankruptcy

    The best and most desirable effect of claiming a bankruptcy in Ontario, is that it gives an individual with overwhelming debts the opportunity for a fresh financial start. It does this by eliminating debt, stopping collection calls and ending wage garnishment orders.

    However, not all debts can be eliminated. It is very important to ensure that you know which of your debts will be absolved before declaring bankruptcy.

    Bankruptcy is also not without some consequences. While the pros of claiming bankruptcy means that your debts will be eliminated, you need to balance this against any cons of bankruptcy including any assets you may lose and the effect on your credit score.

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    Bankruptcy Exemptions: What You Keep

    Under Ontario law, certain assets are exempt from seizure by a bankruptcy trustee in an Ontario bankruptcy. The rules regulating bankruptcy exemptions in Ontario say that in an event of a personal bankruptcy you are permitted to keep the following:

    • unlimited clothing
    • $7,117 for a motor vehicle
    • $14,180 worth of furnishings and appliances
    • $14,405 worth of tools of the trade
    • Most pension plans, certain types of life insurance policies, and RRSPs .

    At Hoyes, Michalos & Associates Inc., prior to filing your Bankruptcy we will ask you to make a list of all items in your house, and to assign a fair value to each item.

    We define fair value as the amount you would get if you were to sell that item at a garage sale. Therefore, even though you may have paid $300 for your television, if it is a few years old it is probably not worth more than $50 or $100 at a garage sale. This helps us determine your exempt assets and non-exempt assets.

    In truth, most people keep all of their assets in bankruptcy. There are alternatives to bankruptcy like a consumer proposal if you have property valued above the exemption limits that must be realized by your licensed insolvency trustee during bankruptcy.

    Can I Get A Credit Card If I Declare Bankruptcy In Canada

    What happens when you file for bankruptcy?

    No. Once you file for bankruptcy, you must hand over your credit cards to your trustee so they can be cancelled. Additionally, your credit rating will be negatively affected by your bankruptcy and Canadian credit bureaus will keep a note about your bankruptcy on your credit report for up to 7 years, depending on your province.

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    What Happens After I Go Bankrupt

    After you go bankrupt, an Official Receiver will be appointed within two weeks of receiving your bankruptcy order.

    They will assess your:

    In order to decide how they can be used to meet your debts.

    You might also be asked to attend an interview with the official receiver.

    Your creditors have to make a formal claim to the trustee for the money they are owed.

    You cant make direct payments to them and they cant ask you for payments.

    After a period of time , most of your outstanding debts are written off and you can make a fresh start.

    Until you are discharged from bankruptcy you will remain under bankruptcy restrictions.

    For example, you wont be able to apply for credit of £500 or more without telling the lender about the bankruptcy.

    You can check your discharge date online using the Individual Insolvency Register on the GOV.UK website

    Any credit you do get is likely to be expensive both now and in the future.

    Bankruptcy affects your credit rating and credit reference agencies will keep your details on file for a minimum of six years.

    How To Apply For Bankruptcy

    If youre applying to become bankrupt, you must complete an online application and create an online account.

    Youll need to provide information about your:

    • debts
    • outgoings.

    Including any letters, youve received from bailiffs or enforcement agents.

    Your application will be reviewed by an official adjudicator who works for the Insolvency Service. Theyll decide if you’ll be made bankrupt.

    You usually get a decision within 28 days of submitting your application.

    There are many ways to deal with debts and bankruptcy might not be the best solution for you.

    You can find out more about how to apply for bankruptcy online on the GOV.UK website

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    What Is The Procedure For Selling The Home

    The process for selling the home will depend on whether your home is held in:

    • sole ownership OR


    Sole ownership means that only one person owns the home.

    • If you are a sole owner who becomes bankrupt, the trustees name is placed on the Certificate of Title in place of your name. This is to enable the trustee to sell your home .
    • The trustee will then determine if the home is to be sold. The home will likely be sold if:
    • there is equity in the home and/or
    • it was not purchased with protected money .
    • Once the home has been sold, the proceeds from the sale will be used to repay your debts.

    What Happens After Bankruptcy

    What Happens To Your Assets When You Declare 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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    Problems With Your Bankruptcy Trustee

    It may be that your creditors are coming to you because they havent heard anything from the official receiver or bankruptcy trustee. Since this is part of their job, if they are failing to act you can make a complaint.

    If your trustee is the official receiver, you should use the Insolvency Services complaints procedure here. If they are an insolvency practitioner, youll need to go through their professional body using the Insolvency Service Complaints Gateway.

    What Happens If You Declare Bankruptcy


    When Valerie Freeman entered the commerce degree program at Ryerson University, she couldn’t help but notice the credit card come-ons that seemed to be everywhere in the student halls, pubs, even residences.

    An optimistic 19-year-old, she took up the offers and was approved on the strength of her future income. Freeman, freshly armed with plastic, indulged in outings at the nearby Eaton Centre for stress-relief shopping.

    It turned into more and more she bought clothing, shoes, gifts, a laptop, You name it, I charged it, Freeman told the Star.

    She rang up $12,000 in consumer debt before she’d completed her second year of studies. The stores were just so close by and it was so convenient. It didn’t feel like I was spending real money, Freeman says.

    She managed to arrange a debt consolidation line of credit at a bank and ran that to its limit with a few more shopping trips. More than $42,000 in the red, she was in full-blown panic mode.

    I couldn’t go to my parents. I spent the money and I needed to be an adult and get myself out by myself.

    Freeman contacted debt counseling agency , which negotiated a payment scheme with the credit card vendors. She pays $955 a month toward her debt and plans to increase the amount, thanks to a new job and a raise.

    She managed to avoid bankruptcy and the black mark she think a consumer proposal would have left on her credit rating. She graduated in 2002 and says she will be debt-free by March 2012.

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