Bankruptcy

Occasionally bankruptcy is the only option available.

A Bankruptcy is considered a debt restructuring option for consumers who have “no other options” and when their debts have become overwhelming. In Canada over 80,000 Canadians filed for Bankruptcy last year. The Bankruptcy process is the most severe form of restructuring and is filed under the Bankruptcy and Insolvency Act whereby a Bankruptcy Trustee takes controls of your assets before you are discharged from your Bankruptcy.

A Bankruptcy (depending on your surplus income) for a first time Bankrupt is up to 21 months and up to 36 months for the 2nd time bankrupt. Alternatively, you can file as many Consumer Proposals as you want without having more severe consequences for the insolvencies.

There are many things that can affect the outcome of your Bankruptcy but here are some highlights for you to consider:

Bankruptcy Highlights

  • You are required to fill out monthly income and expense reports during your Bankruptcy
  • You are required to attend two counseling sessions
  • You cannot be a Director of an incorporated company
  • You may lose income tax returns during your bankruptcy
  • You will not receive any GST cheques during your Bankruptcy
  • You cannot obtain any credit as an un-discharged Bankrupt
  • The Bankruptcy remains on your credit rating for 7 years at an R9

Bankruptcy Benefits

  • Most wage garnishments cease immediately
  • Interest stops accumulating from the day the Bankruptcy is filed
  • Collection agencies can no longer contact you

Through this process a debtor is required to give “Full Disclosure” of all their assets, liabilities, income & expenses as well as business holdings as part of the process.

  • You must be insolvent to file a Bankruptcy (debts are more than assets)
  • You cannot pick and choose the debts that are included
  • You cannot eliminate support or alimony allegations
  • You cannot eliminate student loans under 7 years
  • You cannot include secured debts such as mortgage and car loans
  • You are allowed to keep certain assets based on Provincial legislation

Speak to an expert in confidence.

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