Personal Bankruptcy

Bankruptcy can provide huge benefits where you’re struggling with debt. One of the biggest benefits is that it provides a fresh financial start and will dramatically relieve your stress.

As well, declaring bankruptcy stops those horrible collection actions against you, including wage garnishments and creditor harassment. This can provide a sense of relief and give you the opportunity to regain control of your finances.

Other benefits of bankruptcy include:

• Discharge from debts means no longer responsible for paying them off (with some exceptions).
• Opportunity to learn financial management skills through credit counselling sessions, which can help prevent future financial difficulties.

While declaring bankruptcy can be great for some, we always review alternatives to bankruptcies, such as consumer proposals, debt consolidation, and credit counselling. With the advice of our trustees we’ll provide you with the best way to get out of debt for your financial situation.

To file for bankruptcy, you must meet certain requirements, such as:

• owe at least $1,000 in debts.
• be insolvent, meaning you’re unable to pay your debts as they become due.
• reside in Canada

If you meet these requirements, call, let’s get you started…

When you declare bankruptcy, you hand over control of your assets and finances to a licensed insolvency trustee. The trustee deals with managing your debts and creditors.  During this process unsecured debts are eliminated including:

• all credit card debt
• personal loans, and
• medical, utility and phone bills
• all unsecured debt

There are some exceptions that cannot be discharged, including:

• Court-ordered fines or penalties
• Alimony or child support payments
• Debts incurred through fraud or misrepresentation
• Student loans (if they’re less than seven years old)

While these debts cannot be discharged, there may be other options available for managing them.

For example, most court-ordered fines or penalties and even child support payments allow you to go on a payment plan. Our trustees can help you explore your options and determine the best course of action for your specific situation.

★★★★★ 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.  Michael Dumas. Whitby

When you file for bankruptcy or declare bankruptcy, you surrender control of  any assets to the insolvency trustee. This includes bank accounts, investments, and any non-exempt property you own. You do not have to have assets (property) to declare bankruptcy.

Many assets and property are exempt from seizure, including:

• clothing & personal items
• household furnishings,
• tools of the trade,
• a single vehicle worth up to $7,117, and
• equity in your principal residence up to $10,000.

Your assets (the things you own) are divided into two types: Secure assets and unsecured assets.

• Secured Debt: Secured debt is a type of debt that is tied to a specific asset, such as a home or car. In the event of a default on the debt, the creditor has the right to seize the asset in order to recover the amount owed. In other words, the creditor has a “security interest” in the asset.

• Unsecured Debt: Unsecured debt on the other hand, is not tied to a specific asset. This includes debts such as credit card debt, hydro & water bills, and personal loans. In the event of a default on the debt, the creditor does not have the right to seize any particular asset in order to recover the amount owed.

In secured debt, the creditor may have the right to seize the asset in question unless arrangements are made to repay the debt or surrender the asset. In some cases,(like a home or car) the debtor may be able to keep the asset by continuing to make payments on the debt.

In a bankruptcy, most unsecured debts are discharged, meaning the debtor is no longer responsible for paying them. However, some types of unsecured debt may not be dischargeable, such as student loans or certain tax debts.

The length of your bankruptcy in Ontario will depend on several factors, including:

• your income,
• the amount of debt you owe, and
• whether you’ve ever filed before.

In Ontario, a first-time bankruptcy usually will last for nine months, while a second-time can last for up to 24 months.

When you speak to the trustee, they’ll look at your situation and give you a full answer.

While bankrupts are required to pay a fee, all of your other debts will stop.

You’ll pay a fee to the licensed insolvency trustee, as well as any applicable court fees. The cost will depend on several factors, including the complexity of your case and the amount of debt you owe.

The average cost in Ontario is about $1800 or less over nine (9) months, you pay nothing upfront to start.

During bankruptcy, you’ll make monthly payments to the trustee. The amount you pay will depend on several factors, including:

• your income, and
• the amount of debt you owe

The licensed insolvency trustee will work with you to create a payment plan that you can afford.

Most unsecured debts are eliminated, leaving you with a fresh start and no outstanding payments.

There are some exceptions to this rule, including:

• Court-ordered fines or penalties
• Alimony or child support payments
• Debts incurred through fraud or misrepresentation
• Student loans less than seven years old

While these usually cannot be discharged, usually payment plans can be arranged or modifications made to support payments. Our trustees can explain your options and help with these debts.

★★★★★ Filing for 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

The insolvency trustee deals with your creditor.

Within 5 days of filing the bankruptcy the trustee will send a notice is to each of your creditors.  It is the trustee’s job to speak and deal with the these people, so that you do not have to.

The creditors may if they wish, file a claim with the trustee try to recoup any losses from your surrendered assets.

Filing for bankruptcy in Ontario comes with several negative consequences, including:

• Negative impact on your credit score: Bankruptcy will remain on your credit report for several years and can make it difficult to obtain credit or loans.
• Loss of assets: You may be required to surrender control of your assets, including your bank accounts, investments, and non-exempt property.

The benefits far outweigh the disadvantages including:

• Debt forgiveness: One of the most significant benefits of declaring bankruptcy is the forgiveness of unsecured debt, such as credit card debt and personal loans. This allows individuals to start fresh and rebuild their finances without the burden of overwhelming debt.
• Reduced stress and anxiety: For many individuals, the constant pressure and worry of overwhelming debt can be emotionally exhausting. Individuals can alleviate this stress and anxiety and enjoy a greater sense of relief and peace of mind.
• A fresh start: A clean slate for individuals to start anew and make positive changes in their financial lives. With the help of a licensed trustee, individuals can develop a plan to rebuild their credit and finances and move towards a brighter financial future.

As bankruptcy trustees what we see when we help people is the tremendous amount of stress that is removed from their life. People feel relieved, like they have been given their life back.  Give us a call, let’s talk about your finances and how we can help you.

Once the filing is complete there is an immediate “stay of proceedings“. This order protects you from: pursuing any further collection actions, including:

• collection actions
• wage garnishments
• additional interest and penalties
• lawsuits, and phone calls against the person who has declared bankruptcy.

The stay of proceedings is designed to provide those filing for bankruptcy, relief from phone calls, creditor harassment and give you an opportunity to re-organize your finances.

A “stay of proceedings” is an automatic legal order that takes effect when our trustees file for bankruptcy.

At the end of your bankruptcy, a record is placed on your credit report for a minimum of six (6) years after the date of the discharge. After declaring bankruptcy you will be able to rebuild your credit ratings and put this part of your life behind you.

Declaring bankruptcy affects the way in which tax returns are filed. There are 4 types of income tax returns to complete when filing for bankruptcy.

• previous year’s tax returns (if it was not filed),
• pre-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.
• a post- 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 . When finished all of your taxes and tax returns will be brought up to date. Any funds received from filing back taxes becomes the property of the estate, for the benefit of the creditors.

When declaring bankruptcy, the bankrupt is responsible to surrender all credit cards, non-exempt property and:

• attend any creditor meetings
• provide any tax information, e.g T4 slips
• each month report all income, living expenses and any material budgetary charges
• where you have surplus income, make payments where required
• attend credit counselling sessions
• where you borrow more than 500 dollars, advise the lender that you are a bankrupt
• you may not be a director of a company

Where this is the first time filing and you have no surplus income then you are eligible to be discharged in nine (9) months.

The discharge means that all your debts are cancelled.

Bankruptcy Canada | Bankruptcy Trustees