Per the Bankruptcy and Insolvency Act, the minimum amount that you must owe to file an assignment in bankruptcy is $1,000.  This is a pretty low threshold that the majority of Canadians would exceed.  In over 20 years of practicing in insolvency, the lowest amount of debt that I have seen an individual file for personal bankruptcy for is around $5,000.00.  A bankruptcy may seem like a pretty drastic step to eliminate only $5,000 in debt, but if you are living on minimal income, your wages are being garnished, and you can’t pay your basic rent – the $5,000 debt might as well be $100,000.  The relief that is provided to you by declaring bankruptcy must outweigh the negative consequences.

You must also be insolvent – which means if you were to sell your non-exempt assets, you would be unable to pay your debt in full.  For instance, if you owe $60,000 in credit cards but could sell your house and realize $100,000, you are not insolvent and thus do not have enough debt to file bankruptcy.

It is always best to meet with a Licensed Insolvency Trustee to review your situation in detail.  The Trustee will review the following amounts that will impact if a bankruptcy makes sense for you:

  • Realizable assets – investments, equity in house, recreational vehicles, RESP, etc.
  • Surplus income payments required based on your income and family size
  • Monthly funds available based on your income and monthly living expenses
  • Transfer of any assets that may have occurred in the last 5 years
  • The amount of debt you owe

The initial assessment to analyze your situation and explore solutions is free of charge at Taylor Leibow – Fresh Start Now.  Reach out to us at 1-888–287-2525 we would be happy to review if you have enough debts to file for bankruptcy.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)