Bankruptcy In General

Bankruptcy is a legal process that can be used to eliminate your debt. Unsecured creditors are creditors that you owe money too, that don’t hold security over your assets. Some examples of unsecured creditors are credit cards, unsecured lines of credit, bank loans, income tax debt, other CRA debt, and student loans. The bankruptcy filing is completed using a Licensed Insolvency Trustee that is licenced by the Federal Government. All Licensed Insolvency Trustees must follow the laws of the Bankruptcy and Insolvency Act.

Creditors/Collection Agencies

If creditors or collection agencies are harassing you, filing an assignment in Bankruptcy will stop all the creditors from contacting you. The bankruptcy process allows for a stay of proceedings. This legal term can be explained as making it illegal for creditors to continue to contact you. When you file for Bankruptcy there are certain rules your creditors must follow. They cannot start or continue collection calls, they cannot garnish your wages, or begin or continue court actions. If your creditors have any questions or concerns, they will be required to contact the Licensed Insolvency Trustee instead of calling you!

Length of the Bankruptcy Process

The bankruptcy process can take as little as 9 months to complete. However, in certain situations, it may take up to 21 months to complete the process (or up to 36 months if you have been bankrupt once before). The length of a bankruptcy is prescribed by the law. During your free consultation, our Licensed Insolvency Trustee’s will determine the length of your bankruptcy process and explain to you how your individual situation affects the length of the process.

The end result of Bankruptcy: Discharge of your debts

At the end of your bankruptcy process you will receive a discharge. A bankruptcy discharge officially cancels all of your unsecured debts. No creditor will be able to collect your debts that existed when you began the process.

During Your Bankruptcy

During your bankruptcy process, you will attend two free counselling sessions. These are one-on-one sessions designed to assist you in determining the causes of your financial problems, to teach you money management skills and help you avoid financial problems in the future.

You will also be required to update your Licensed Insolvency of any changes in your financial situation, and perform the duties of a bankrupt, as outlines in the Bankruptcy and Insolvency Act.

Your Concerns With Filing for Bankruptcy

You may have concerns about the effect that bankruptcy can have on your life. Please refer to the Frequently Asked Questions (FAQs) below

Some Frequently Asked Questions:

Q: Will I lose all of my assets or belongings?

A: NO! The majority of individuals are able to keep their assets. The following is a common list of assets that cannot be taken in a bankruptcy, and are protected from seizure by the law:

  • House – most individuals are able to keep their principal residence. Your Licensed Insolvency Trustee will explain the effect of your bankruptcy on your house during your free consultation.
  • Vehicles – up to a value of $7,000. You may be able to keep your vehicle if it is worth more. Ask your Licensed Insolvency Trustee how!
  • Registered Retirement Savings Plan (RRSPs) – all contributions made to your RRSP are exempt from seizure as long as they were contributed at least one-year before your bankruptcy
  • Registered Education Savings Plan (RESPs) and Tax Free Savings Accounts (TFSAs)

Q: A lot of people tell me that bankruptcy is bad. Is this true?

A: There are many stories you may hear from people about bankruptcy. Most of these are likely not true. Each individual will have a different situation and a different bankruptcy proves. When you meet with your Licensed Insolvency Trustee during your free consultation, you are encouraged to ask any questions about the bankruptcy process or discuss any concerns you may have.

Q: A lot of people tell me that bankruptcy is bad. Is this true?

A: There are many stories you may hear from people about bankruptcy. Most of these are likely not true. Each individual will have a different situation and a different bankruptcy proves. When you meet with your Licensced Insolvency Trustee during your free consultation, you are encouraged to ask any questions about the bankruptcy process or discuss any concerns you may have.

Q: Will all of my debts be discharged?

A: Unfortunately, some of your debts may not be discharged. The following are debts that cannot be discharged:

  • Spousal support payments
  • Child support payments
  • Student loans if you have not been out of school for at least 7 years
  • Fines or penalties issued by a court