Bankruptcy in Ontario | Licensed Insolvency Trustees

How Bankruptcy Works in Ontario

Bankruptcy in Ontario handled by Licensed Insolvency Trustees serving Durham Region, Pickering, Oshawa, and areas east. Local, confidential help for individuals and families.

How Bankruptcy Works in Ontario

How does bankruptcy work in Ontario? The process starts by meeting with a Licensed Insolvency Trustee.

The trustee reviews your debts and income and explains how the bankruptcy process works. If you decide to proceed, the trustee prepares and files all of the required paperwork on your behalf. Once the bankruptcy is filed, most collection calls, wage garnishments, and legal action by unsecured creditors must stop.

During the bankruptcy, you will be required to complete certain duties, including reporting your income and attending financial counselling sessions. After those duties are completed, you can receive a discharge from bankruptcy, which eliminates most unsecured debts and allows you to make a fresh financial start.

Where you’d like to speak to a trustee right away, give us a call at 905-721-7506. 

Here’s how filing for bankruptcy can help you:

  • Stops collection calls & legal actions — instantly regain peace of mind. Once you file, creditors must immediately cease all collection attempts and lawsuits, giving you immediate relief from the constant pressure and harassment.
  • Eliminate most unsecured debts — say goodbye to credit card debt, payday loans, and outstanding bills. Bankruptcy can discharge various unsecured obligations including medical bills, personal loans, and utility arrears, potentially eliminating thousands in debt.
  • Keep essential assets — protect what matters most, like your home and personal belongings. Through legal exemptions, you can often retain your primary residence, vehicles, necessary household items, and retirement accounts while still eliminating debt.
  • Get expert guidance — Our Licensed Insolvency Trustees handle everything and guide you through every step. These professionals manage the entire process, negotiate with creditors on your behalf, and provide personalized advice tailored to your unique situation.
  • Access free credit counselling — learn how to rebuild and strengthen your financial future. You’ll receive financial education that teaches budgeting skills and effective strategies to rebuild your credit score through responsible habits.
  • Start fresh and stress-free — focus on your goals with a clean financial slate. Once discharged, you can begin rebuilding your financial life without overwhelming debt, allowing you to redirect resources toward savings and future goals.

Declaring bankruptcy can be the first step toward a brighter financial future. It’s a legal process designed to help you eliminate debt, reduce stress, and give you a fresh start.

Bankruptcy – Step by Step

Initial Consultation – Assessing Your Situation

The first and hardest step is to give us a call.

Let just first have a conversation about your finances with one of our trustees. We’ll listen to whats been happening and the issues you’ve been facing.  The trustee will ask you about your debts, income, and assets.

After hearing from you the trustee will explain how bankruptcy works, its potential impact on your finances, and alternatives like a consumer proposal and if bankruptcy is the right fit for you.

Filing for Bankruptcy – Starting the Process

If bankruptcy is the right solution, the trustee will prepare and file the necessary paperwork with the Office of the Superintendent of Bankruptcy.

From that moment, collection calls, wage garnishments, and legal actions stop immediately. The trustee will also explain which assets you can keep and which ones may need to be surrendered.

What Happens to Your Property?

In Ontario, certain assets are exempt from seizure if you’re filing for bankruptcy, meaning you can keep them. These typically include:

  • Basic household items, furniture, and clothing.
  • Tools of your trade (up to a specific value).
  • A primary vehicle (up to a set value).
  • Most registered retirement savings plans (RRSPs), except recent contributions.
  • A portion of the equity in your primary residence (varies by province).

Non-exempt assets—such as luxury items, secondary vehicles, or high-value investments—may need to be surrendered and sold by the trustee to help repay creditors. The trustee will provide a clear breakdown of what’s protected and what’s not based on your situation.

Once your bankruptcy is filed, the court issues a “stay of proceedings”. A stay of proceedings, means that debts are forgiven (gone).

Creditors are prohibited from calling or harassing you and all legal actions including wage garnishments are stopped.

Bankruptcy Discharges – Your Fresh Financial Start

A bankruptcy discharge is the legal step that clears most debts and officially ends the bankruptcy, meaning you are no longer required to repay those debts.

After completing the bankruptcy, you’ll receive a discharge—usually after 9 months (or 21 months if surplus income applies). This officially clears you from unsecured debts in your bankruptcy, giving you a clean slate and the opportunity to rebuild your financial future.

★★★★★ It was easier than I initially thought, I gave a list of all my creditors and credit card bills.  They took me through the whole bankruptcy process including updating my taxes.  A huge relief to have this all cleared up, I didn’t want to file for bankruptcy, but YanchDey took the stress out, thanks again! Michael Dumas. Whitby

What You Keep in Bankruptcy

Many people worry about losing everything if they file for bankruptcy but thats not true. The truth is, you keep most of your essential belongings. Bankruptcy laws in Canada are designed to protect the things you need to move forward. Here’s what you can typically keep:

  • Personal belongings – All clothing and essential personal items
  • Furniture & appliances – Up to $13,000 in value
  • Your vehicle – If worth $6,000 or less
  • Tools of the trade – Any tools or equipment needed for your work
  • Farming equipment – Up to $19,000 in value
  • Certain financial assets – Pension plans, life insurance policies, and some RRSPs

Rules and exemptions can change over time, but our Licensed Insolvency Trustees are here to guide you through what applies to your situation.

Still have questions? Call us today to find out exactly what you can keep and how bankruptcy can give you a fresh start.

Speak to a Insolvency Trustee Today, Call 905-721-7506

Bankruptcy: What You Lose & Non-Exempt Items

When you file for bankruptcy, certain assets may need to be surrendered to the Licensed Insolvency Trustee. These are called non-exempt assets and typically include:

  • Homes with equity – If your home has value beyond your mortgage, it may need to be sold.
  • Vehicles worth over $6,000 – You may need to surrender or buy back the difference.
  • Savings & Investments – This includes TFSA accounts, RESP savings, and cash in bank accounts.
  • Valuable personal items – Any possessions that can be sold for cash, excluding essential items.

Considering Alternatives?

If you own assets, have income, and are working, a consumer proposal may be a better option—allowing you to settle your debts without losing any property.

No Assets? No Problem

If you don’t own significant assets, there’s nothing to surrender, making bankruptcy a straightforward solution.

Not sure what applies to you? Give us a call—we’ll help you understand your options and find the best path forward.

The Role of an Insolvency Trustee in Bankruptcy

When you file for bankruptcy, our Licensed Insolvency Trustees (LIT) will guide you through the process, ensuring all necessary forms and paperwork are properly filed.

The trustee’s responsibilities include:

  • Assisting you throughout the bankruptcy process
  • Liquidating any non-exempt assets
  • Distributing funds to creditors from liquidated assets
  • Negotiating settlements and communicating with creditors
  • Providing credit counseling and exploring alternatives like consumer proposals

Once your bankruptcy is filed, your creditors are notified within five days. From that point, the trustee handles all communication, so you don’t have to deal with collection calls or demands.

In some cases, creditors may file a claim to recover losses from the assets you surrender, but the trustee manages this process on your behalf.

Considering bankruptcy? Call us today to learn how we can help you move forward with confidence.

Wage Garnishments: How filing for bankruptcy stops wage garnishments.

Bankruptcy: What are the benefits and disadvantages of bankruptcy

Bankruptcy FAQs: Questions answered about filing for bankruptcy

Bankruptcy law allows for debt relief and financial counselling of a person or business while treating creditors fairly.

Tax Returns & Bankruptcy

Filing for bankruptcy affects the way in which tax returns are filed. There are 4 types of income tax returns that must be filed.

  • previous year’s tax returns (if it was not filed),
  • pre-bankruptcy return,
    • for the beginning of the tax year to the day before filing
    • from the 1st of January to the day before your filing date.
  • in-bankruptcy return,
    • reporting any income you received from the liquidation of your assets, which comes into the estate and is disbursed to creditors as per the Bankruptcy and Insolvency Act.
  • a post-bankruptcy return
    • for your income reporting,
    • from the date of bankruptcy to the end of the tax year, Dec. 31st.

The trustee will assist with dealing with the CRA . The returns are filed up to the date of bankruptcy.

Any funds received from filing back taxes become property of the estate and are for the benefit of the creditors.

★★★★★ Bankruptcy was the last thing we wanted to do, but the trustee made the process very smooth, they did all the paperwork and dealt with our creditors.  The garnishee was stopped and we can sleep at night, we now have a fresh start. Many thanks, David Newman, Ajax

After Bankruptcy – Rebuilding Your Financial Future

Bankruptcy doesn’t mean the end of your financial future—it’s a fresh start. While a record of your bankruptcy will remain on your credit report for at least six years after discharge, there are ways to move forward.

Here’s what to keep in mind:

  • You may still qualify for credit sooner than you expect.
  • Taking steps to gradually rebuild your credit can improve your financial standing.
  • Responsible financial habits can help you put this chapter behind you and move forward with confidence.

Ready to take the next step? Call us today, and let’s discuss how you can rebuild and regain financial stability.

Get Started today!

Insolvency Trustee Kelly Dey for Consumer Proposals
Insolvency Trustee Kelly Dey for Consumer Proposals

Questions about filing for bankruptcy and insolvency? I invite you to call our office to speak to myself or one of our insolvency trustees.

We’re happy to speak over the phone or in-person at one of our offices.

Where you have questions or need some advice, please feel free to give us a call without cost or obligation.

Call us today at 905-721-7506.

Bankruptcy: Frequently Asked Questions

Q. What Debts Cannot Be Cleared by Bankruptcy in Ontario?

A. These non-dischargeable debts are set out in the Bankruptcy and Insolvency Act and commonly include:

  • court-ordered support payments
    • such as child support or spousal support,
  • fines and penalties imposed by a court, and
  • student loans
    • if you have been out of school for less than seven years
    • (with limited hardship exceptions after five).

Debts arising from fraud, misrepresentation, or embezzlement are also not wiped out.

Understanding these exceptions is critical, because an Insolvency Trustee will help you confirm exactly which debts will be eliminated and which ones will remain, giving you clarity before you file.

Q. What happens immediately after you declare bankruptcy in Ontario?

A. Once you declare bankruptcy, an Insolvency Trustee notifies your creditors. You stop making any payments and collection actions stop immediately thank’s to whats called a stay of proceedings. You’ll begin making monthly payments to the trustee for the bankruptcy and be obligated to attend two financial counselling sessions as part of the process.

Q. How much do you pay monthly for bankruptcies in Canada?

A. Monthly bankruptcy payments in Canada depend on your household income, family size, and whether surplus income rules apply.

Many first-time bankruptcies begin with a base payment that is often a few hundred dollars per month, but this amount can increase if your income exceeds government thresholds.

Payments cover regulated trustee fees, mandatory counselling sessions, and any required surplus income contributions, all of which are calculated and explained in advance by a Licensed Insolvency Trustee.

Q. What will I lose if I file for bankruptcy?

A. Filing for bankruptcy does not mean losing everything, but you may have to give up non-exempt assets.

In Ontario, this can include high-value vehicles, recreational property, non-registered investments, RRSP contributions made in the last 12 months, and significant cash savings.

Many people are surprised to learn that everyday necessities and essential assets are protected, and in some cases you can keep certain assets by paying their non-exempt value instead.

Q. What assets cannot be seized in bankruptcies?

A. Ontario law protects specific assets so you can maintain a basic standard of living.

These exemptions typically include essential household furnishings and appliances up to a set value, necessary clothing, tools of the trade used to earn income within prescribed limits, and limited home equity.

Most RRSP contributions older than 12 months and many pensions are also protected, helping ensure bankruptcy offers a true financial reset rather than hardship.

Q. What can they take during bankruptcies?

A. Ontario law protects specific assets so you can maintain a basic standard of living.

These exemptions typically include essential household furnishings and appliances up to a set value, necessary clothing, tools of the trade used to earn income within prescribed limits, and limited home equity.

Most RRSP contributions older than 12 months and many pensions are also protected, helping ensure bankruptcy offers a true financial reset rather than hardship.

Q. What is Chapter 7 bankruptcy, and does it apply in Canada?

A. Chapter 7 bankruptcy is a U.S. legal concept and does not apply in Canada.

In the United States, Chapter 7 involves liquidating certain assets to pay creditors. Canada operates under the Bankruptcy and Insolvency Act, with a different process overseen by Licensed Insolvency Trustees rather than courts.

While both systems aim to provide debt relief, the rules, protections, costs, and timelines are entirely different, making U.S. bankruptcy terms irrelevant for Ontario filings.

Q. How long does bankruptcy last?

A. A first-time bankruptcy in Ontario typically lasts nine months if no surplus income applies, or 21 months if it does.

A second bankruptcy usually lasts longer, often between 24 and 36 months depending on income.

During this period, you make required payments, submit income reports, and complete financial counselling, after which an official discharge allows you to move forward debt-free and start rebuilding your financial future.

bankruptcy and insolvency trustees for Oshawa and throughout Durham Region Ontario
Licensed Insolvency Trustee - Kelly Dey for bankruptcy and Insolvency in Oshawa and throughout Durham Region Ontario

Insolvency Trustee – Kelly Dey

If you’re feeling weighed down by money or debt issues, give me a call at 905-721-7506 and lets just have conversation. We can discuss your issues, and how I can help you.

Bankruptcy | Bankruptcy Trustee Reviews

R. Mitchell

6 days ago

★★★★★  Kelly and her staff made the bankruptcy process very easy.  It was a relief to my wife and I to have professionals such as these, very supportive. Thanks again

D. Ganguli

2 weeks ago

★★★★★ Some bad financial decisions including being laid off resulted in huge credit cards bills that we were never going to be able to pay off.  When we finally got fed up with the collection calls, my husband and I decided to get some help.  We decided on bankruptcy giving up many things we didn’t really need, and the counseling was great for us at our age.  It wasn’t easy, but we are much happier and debt free.  Thanks Again, would recommend.

Jo-anne Lee

1 month ago

★★★★★ I had a student loans of $14,000, and a balance on my credit card, then I received a letter of garnishment.  A credit counselor recommended I look into filing for bankruptcy. The bankruptcy trustee was easy to speak with and listened to me.  Together we discussed the pros and cons and options available.  The bankruptcy will pass, but I’m much happier without the burden of debt in my life. I should have gotten the financial counseling years ago.

Christia McIntyre

4 weeks ago

★★★★★ Professional and friendly, on their advice I did a consumer proposal vs bankruptcy and will be completely out of debt in 2.5 years!!  Many thanks

S. Lee

1 month ago

★★★★★ They were completely upfront about what my options were, and gave me a clear cut plan about how I could stop the calls, bill collectors and bills that just kept getting bigger and bigger.  Filing for bankruptcy was not an easy decision but the trustee was there for me all the way.  Thanks Again!

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Association of Insolvency and Restructuring Professionals

What happens when you declare bankruptcy in Ontario?

A: When you declare bankruptcy in Ontario, you will be required to surrender any non-exempt assets to a Licensed Insolvency Trustee (LIT) who will sell them to pay off your debts.

Your creditors will be notified and instructed to stop all collection actions against you. You will also be required to attend credit counselling sessions and make regular payments to the LIT.

Once the bankruptcy process is complete, you may be eligible for a discharge from your debts.

Who qualifies for bankruptcy in Ontario?

A: To qualify for bankruptcy in Ontario, you must owe at least $1,000 in unsecured debts and be unable to pay them back.

You must reside in Canada or have the majority of your assets located in Canada. You also cannot have filed for bankruptcy within the past seven years.

How long is the bankruptcy process in Ontario?

A: A first-time bankruptcy in Ontario typically lasts nine months. If surplus income applies, the process may extend to 21 months.

Bankruptcy should be considered a last-resort option. Alternatives such as
consumer proposals,
debt consolidation, or credit counselling may be available. A Licensed Insolvency Trustee can help determine the best solution.

How much does it cost to go bankrupt in Ontario?

A: The cost of filing for bankruptcy in Ontario varies depending on income and household size. Most first-time bankruptcies involve regulated monthly payments rather than a single upfront fee.

What do you lose if you declare bankruptcy in Canada?

A: You may be required to surrender non-exempt assets such as luxury vehicles, recreational property, or excess home equity.

Most personal items are protected, including essential household goods, modest vehicles, tools of the trade, pensions, and older RRSPs. A trustee can review your specific situation in detail.

What debts survive bankruptcy?

A: Certain debts are not discharged through bankruptcy, including recent student loans, court fines, restitution orders, and child or spousal support obligations.

Can I keep my car if I declare bankruptcy?

A: Whether you can keep your car depends on its value and the amount of equity. If the equity is within Ontario’s exemption limit, you may be able to retain it.

How much do you pay monthly for bankruptcies?

A: Monthly bankruptcy payments are based on income, family size, and surplus income guidelines set by the federal government.

Can you buy a house after bankruptcy in Ontario?

A: Yes, many people buy a home after bankruptcy. Most focus first on rebuilding credit and savings before applying for a mortgage, often starting with higher interest rates.

What happens 12 months after bankruptcy?

A: After 12 months, many first-time bankrupt individuals are eligible for discharge, allowing them to begin rebuilding their credit and financial stability.

What happens 5 years after bankruptcy?

A: Five years after bankruptcy, it is often removed from your credit report, improving access to credit, though some lenders may still consider past filings.

Filing for Bankruptcy with YanchDey and Associates
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Call 905-721-7506