In order to file bankruptcy, an individual must sign various documents (prepared by the trustee), which disclose the individual’s assets and creditors, income and expenses, and other pertinent information. The trustee then files these documents with the Office of the Superintendent of Bankruptcy. The bankruptcy becomes effective upon the filing of these documents.
Upon filing, the bankrupt individual is under creditor protection (called a “stay of proceedings”), meaning that no creditor can take any action to collect outstanding debts. Bankruptcy protection applies to most unsecured creditors, such as credit cards and lines of credit, unsecured loans, income taxes, student loans, and miscellaneous other debts. Bankruptcy protection doesn’t apply to certain creditors. Some examples include creditors that hold security over assets of a bankrupt (e.g., mortgage, car loan); and child or spousal support.
Upon filing, all assets of a bankrupt vest in the trustee for the benefit of the bankrupt’s unsecured creditors. Certain assets are exempt from bankruptcy, and these assets may vary from province to province. Click here for a list of the provincial exemptions for British Columbia.
Stay tuned for Part 3, where we'll discuss what happens during bankruptcy.
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Lana Gilbertson is a Licensed Insolvency Trustee with MNP Ltd., based in Vancouver, BC for more about how Lana can help, contact her directly at 604-637-1599 or firstname.lastname@example.org.
Click here for a list of our offices throughout Greater Vancouver, Fraser Valley and Vancouver Island.