The Process

Personal Bankruptcy

A personal bankruptcy is a legal process that allows you to become debt free whilst retaining enough assets to allow you to have a Fresh Start in life (excluding secured debt and debts that survive a bankruptcy).

financially stressed woman reviewing bills

At a free, initial assessment our Trustees will review your financial situation in detail and explore all debt relief options with you.  If you decide to proceed with an assignment in bankruptcy, they will prepare the statutory documents for you to sign.  Once the bankruptcy is filed with the Office of the Superintendent of Bankruptcy, your Trustee will work with you to ensure you understand and follow your obligations to eventually obtain your discharge.

Stay of Proceedings

Upon the filing of a bankruptcy assignment, there is an automatic stay of proceedings in place which stops your unsecured creditors from pursuing you for payment of their debt. The stay of proceedings will stop a wage garnishment and collection calls and provide you with peace of mind. The stay of proceedings is also effective against the Government of Canada and garnishments for income tax and other tax debts.

Assets

Your Trustee will work with you to realize on any non-exempt assets you own that have a value. You may be able to settle with the Trustee to retain these assets, or the Trustee will sell them if an agreement cannot be reached.

When reviewing your assets, the Trustee will compare the value of the asset to any debt secured against it to calculate if there is any realizable value. For example, if you own a home worth $100,000 and have a mortgage secured against it for $80,000, the equity or value is only $20,000.

Under Provincial legislation, certain assets are exempt from seizure by your Trustee. For example:

  • Your home if the equity is less than $10,783;

  • Household furniture up to a value of $14,180;

  • One personal automobile up to a value of $7,117;

  • Tools of the trade (required to perform your work) up to a value of $14,405;

  • Registered Retirement Savings Plans (RRSPs) and Registered Disability Savings Plans (RDSPs) (except for any contributions made in the preceding twelve months) and certain life insurance policies.

Your Licensed Insolvency Trustee will explain these in full at your free, initial assessment.

Debts

A bankruptcy will generally relieve you of all debts owing at the date of filing except for certain specific debts that survive a bankruptcy, for example:

  • Any fines or penalties imposed by a Court;

  • Any debt for alimony, child support or maintenance;

  • Any debts arising from illegal activity such as fraud, embezzlement, misappropriation;

  • Student loans if less than seven years have elapsed from completion of your studies.

Amounts owing to Canada Revenue Agency for personal income taxes and other tax liabilities are discharged in a bankruptcy or proposal.

Surplus Income

The Superintendent of Bankruptcy has set a minimum level of income that is required for living expenses depending on your family size If your family income exceeds this level, you may be required to make monthly payments to the Trustee. Your Trustee will explain this in detail at your initial assessment in our Hamilton, Burlington, or St. Catharines offices or virtually if you prefer, and give you an estimate of the monthly amount payable.

Discharge from bankruptcy

  • As a first time bankrupt with monthly family net income below the limit set by the Superintendent of Bankruptcy, you may be eligible for an automatic discharge after only nine months.  If you have a higher level of income and are obligated to make surplus income payments to the Trustee, this time period is extended to 21 months.

  • A second time bankrupt with monthly family net income below the limit set by the Superintendent of Bankruptcy is eligible for an automatic discharge after twenty-four months or thirty-six months with a higher level of income.

  • A bankruptcy will have a negative impact on your credit rating. In addition, individual debts are reported as an R9. A bankruptcy will be reported on your credit report for 7 years from the date of discharge for a first-time bankruptcy.   A second bankruptcy will be reported for 14 years from the date of discharge.  The relief from your debt problems typically outweighs the negative impact on your credit report and the Trustee will discuss rebuilding your credit in two mandatory counselling sessions.

Contact one of our Licensed Insolvency Trustees at our Hamilton, Burlington, or St Catharines offices to see if a bankruptcy is the correct debt solution for you.

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