"Filing for bankruptcy is a difficult choice, but sometimes it is the only way to move forward. There is no shame in bankruptcy. In my experience, no one has ever regretted filing bankruptcy - only not doing it sooner."
- Lana Gilbertson, Licensed Insolvency Trustee
What is Personal Bankruptcy?
Bankruptcy is a legal process available to Canadians who cannot pay their debts and who have no other way to deal with their creditors. However, that is not to say that bankruptcy is the end of the line – sometimes bankruptcy is simply the wisest choice. In any event, deciding to file for bankruptcy is a hard decision.
How do I File for Bankruptcy?
In Canada, bankruptcy must be filed through a Licensed Insolvency Trustee, who is responsible for administering the bankruptcy estate.
Before filing for bankruptcy, you must meet with a Licensed Insolvency Trustee who will assess your situation to ensure you qualify to file for bankruptcy. You qualify to file bankruptcy provided that you owe at least $1,000 and cannot meet your debt obligations as they generally fall due. The Licensed Insolvency Trustee will also explore whether you qualify for other options, such as a consumer proposal or debt management plan.
If you decide that bankruptcy is the right option for you, the Licensed Insolvency Trustee will collect financial information from you and prepare legal bankruptcy papers, which you must sign.
Once the legal paperwork has been signed, the Licensed Insolvency Trustee will file the papers with the Office of the Superintendent of Bankruptcy. Your bankruptcy process begins when the paperwork is filed.
Before filing for bankruptcy, you must meet with a Licensed Insolvency Trustee who will assess your situation to ensure you qualify to file for bankruptcy. You qualify to file bankruptcy provided that you owe at least $1,000 and cannot meet your debt obligations as they generally fall due. The Licensed Insolvency Trustee will also explore whether you qualify for other options, such as a consumer proposal or debt management plan.
If you decide that bankruptcy is the right option for you, the Licensed Insolvency Trustee will collect financial information from you and prepare legal bankruptcy papers, which you must sign.
Once the legal paperwork has been signed, the Licensed Insolvency Trustee will file the papers with the Office of the Superintendent of Bankruptcy. Your bankruptcy process begins when the paperwork is filed.
What Happens After I File for Bankruptcy?
Filing for bankruptcy provides you with immediate protection from virtually all unsecured creditors and any collections or legal action by creditors is immediately stopped. You no longer have to pay or deal with your creditors during bankruptcy. This protection lasts during your bankruptcy and until you are discharged - or released - from bankruptcy.
During bankruptcy, you must fulfill some duties and obligations. Click here to learn about the duties of a Bankrupt.
During bankruptcy, you must fulfill some duties and obligations. Click here to learn about the duties of a Bankrupt.
How Long Will I Be in Bankruptcy?
Bankruptcy is a relatively short process that lasts as little as nine (9) months and as long as three (3) years or more in extraordinary circumstances. Click here to learn about bankruptcy in Canada how long does it last.
Which Debts Are Not Extinguished in Bankruptcy?
The following are examples of unsecured debts that will not be extinguished in bankruptcy:
- Court fines and penalties;
- Damages for assault;
- Child support and spousal support;
- Debt arising from fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity;
- Any debt resulting from obtaining property or services by false pretences or fraudulent misrepresentation;
- Student loans where the debtor was a full- or part-time student at any time within the seven year period prior to filing the consumer proposal; and
- Interest accruing on those debts.
What are the Duties of a Licensed Insolvency Trustee?
The Licensed Insolvency Trustee has the following duties in a bankruptcy:
- verifying your debts, assets, and other aspects of your financial situation;
- taking possession of any assets that are not exempt ;
- collecting a portion of your income if it exceeds a government set guideline (see my video explaining "Surplus Income");
- filing certain income tax returns;
- reporting to your creditors, to the Office of the Superintendent of Bankruptcy, and to the Court, as required; and
- any other duties that are necessary.
