Personal Bankruptcy TORONTO

When you file for bankruptcy, an immediate ‘stay of proceedings’ happens. This means that unsecured creditors cannot start or continue lawsuits, wage garnishees, or contact you to request payment.

Within five days of the bankruptcy starting the trustee will send a copy of the paperwork to creditors, so they can file a claim.
The trustee will file outstanding tax returns up to the date of bankruptcy. Any taxes or penalties owed CRA will be included.
You will have certain obligations that you will have to fulfill including a monthly income statement and attending credit counselling sessions.

One of the most common questions about how to declare bankruptcy in Canada is what the duties of the person filing the case are. The goal is to erase the debts that can’t be paid, but during the case, the debtor is expected to:

•  Surrender assets – If you own something that is worth more than what you owe on it, you may have to give it to the person in charge of your bankruptcy case. This is just one reason why it’s a good idea to talk to a licensed insolvency trustee before deciding if bankruptcy is the right choice for you.
•  Surrender you credit cards – People who are interested in declaring bankruptcy in Canada need to understand that they will not be able to get more debt while they are trying to clear their existing debts. When someone files for bankruptcy, they have to give all of their credit cards to the trustee.
•  Attend credit counselling sessions – You must attend one credit counselling session within 90 days of filing your bankruptcy case. You must also complete a second session before you are discharged from bankruptcy. The goal of these counselling sessions is to help you avoid making choices that got you into this situation in the first place.
•  Provide monthly income statements – If you want to file for bankruptcy in Canada, you have to provide the trustee with monthly statements that show your income and basic bills. You also need to provide all of the information necessary to complete those returns.
•  Make your payments – In most cases, the debtor will have to pay some money each month to the bankruptcy estate. The fees for the trustee are set by the government.

Almost all of your debts will be cancelled after you file for bankruptcy. There are a few exceptions, but most people’s debts will be forgiven. The note about your bankruptcy will stay on your credit report for six years, but this is nothing to worry about. In nine months, your bankruptcy will be discharged and you can start rebuilding your credit. Your trustee can help you do this by giving you advice on how to get your credit score back up and by helping you manage your money.

Deciding to declare bankruptcy is not an easy decision to make, but it can be a viable solution to clear debt depending on the financial circumstances. When you declare bankruptcy, all of your eligible debts become legally binding contracts that must be repaid. Bankruptcy can help you get a fresh start by relieving you of your debt burden, but it’s essential to understand how bankruptcies work in Ontario before making any decisions.

Ideally, nobody ever plans on filing for bankruptcy, but sometimes it is the only option left. If you consider claiming bankruptcies in Canada, knowing the process and what to expect is important.

Bankruptcy is a legal process that gives opportunities to individuals to reorganize or restructure their finances and eliminate their debt. This process is overseen by a bankruptcy court and generally takes between six months and three years to complete. Bankruptcy can be filed for several reasons, such as personal financial difficulties, business restructuring, or eliminating creditors’ claims.

Individuals who file for bankruptcy protection typically do so because they are unable to repay their debts. When individual files for bankruptcy, all of their assets are taken into account to pay off creditors; if the value of the assets does not cover the amount of debt owed, the court may liquidate some of the debtor’s assets to pay off creditors. Bankruptcy is not a decision that should be taken lightly. It can have severe consequences for your credit rating and future borrowing ability. It is essential to understand the ramifications of bankruptcy before making decisions.

When an individual files for bankruptcy in Canada, it is a legal declaration of insolvency. This means that the individual can no longer repay their debts as they become due. The Bankruptcy and Insolvency Act (BIA) governs the process by which individuals can file for bankruptcy and how it must be administered.

The process of bankruptcy should always be managed by a Licensed Insolvency Trustee. The bankrupt’s assets are sold, and the proceeds are used to repay creditors. The debtor is discharged from bankruptcy once all debts are repaid.

•   What happens to your assets?

In Canada, when you declare bankruptcy, your assets are divided into two categories: exempt and non-exempt.

Exempt assets are protected from being seized by creditors and include items such as your home, car, furniture, clothing, and tools of the trade. Non-exempt assets are not protected and can possibly be seized by creditors to be used to pay off your debts.

The most common types of exempt assets comprise:

Ø Personal effects (e.g., clothing, furniture, appliances)

Ø Household goods (e.g., dishes, pots, and pans)

Ø Tools of the trade (e.g., tools used for your job)

Ø Vehicles up to a particular value

Ø RRSPs and other registered retirement savings plans

The most common types of non-exempt assets comprise:

Ø Cash

Ø Investments (e.g., stocks, bonds, GICs)

Ø Property (e.g., real estate, cars)

Ø Business assets

Ø Unpaid wages

During bankruptcy proceedings, an appointed Licensed trustee will review your financial condition and determine which assets can be used to repay your creditors. Our licensed Insolvency trustees at Risman Zysman make sure that you retain possession of most of your assets and only consider selling them if necessary. You can keep a certain amount of assets (called exemptions) to live on. The exact amount depends on the province or territory in which you reside.

• What Happens to your Debts?

Majority of your unsecured debts are forgiven when you claim bankruptcies in Canada. This includes credit card debts, lines of credit, and personal loans. Secured debts (e.g., car loans, mortgages) are not forgiven and must be repaid. Student loans are a case; they are considered unsecured debts if you’ve been out of school for seven years.

Creditors cannot take legal action against you to collect your debts after filing for bankruptcy. This includes wage garnishment, legal action, and seizure of assets. Although, there are a few exceptions to this rule. For instance, creditors can continue to pursue you for repayment of child support and alimony payments. Additionally, if you have obtained money through fraud or misrepresentation, the court may order that the debt be repaid even after being discharged from bankruptcy.

Although declaring bankruptcy will relieve you of most of your debt obligations, it is important to remember that there are better debt relief options available as well that should be considered. Bankruptcy can potentially impact your credit score and your ability to obtain credit in the future.

• What Happens To Your Income?

When you declare bankruptcy in Canada, your income will be affected in a few different ways. First of all, any money that you owe to your creditors will be frozen. This means that you will not be able to access it or use it to pay your bills. Secondly, your tax returns for the previous year will be applied to your bankruptcy estate. This can impact your current income and make it more challenging to make ends meet. Finally, your credit score will be significantly affected by bankruptcy. Thus, making it difficult to get loans or lines of credit in the future.

While declaring bankruptcy can have some short-term effects on your income, it is often the best solution for individuals struggling with debt. It provides you with a fresh start and allows you to rebuild your credit score over time.

•   How Is Credit Score Impacted After Bankruptcy

Declaring bankruptcy will have a significant impact on your credit score in Canada. That’s because bankruptcy is considered a significant financial setback, and it will stay on your credit report for up to seven years. Bankruptcy can make it challenging to obtain new credit during that time. In addition, missed repayments or collector calls related to your bankruptcy can also impact your score.

The bright side is that your credit file is clean again once the bankruptcy is discharged, and you can initiate rebuilding your credit rating. There are some options available to help you do this, such as secured credit cards and lines of credit. At Risman Zysman, you can work with our credit counseling service to develop a plan to improve your credit rating.

The decision of when to file for bankruptcy will depend on various factors specific to each case. However, some signs that it may be time to consider bankruptcy filing include struggling to make ends meet despite making significant financial sacrifices if creditors are harassing you or facing legal action due to your inability to repay debts.

If you are considering a bankruptcy filing, it is crucial to speak with an experienced licensed insolvency trustee who can help guide you through the process and advise you on the best course of action for your specific situation. Our Licensed Insolvency Trustees at Risman Zysman can help you understand your options and develop a plan to get out of debt. We can also assist you in improving your financial situation and avoiding future debt problems.

A trustee is an individual or institution responsible for holding and managing assets on behalf of another person or entity. In bankruptcy, the court-appointed a trustee to oversee the process and administer the bankrupt estate. The trustee’s role is to collect and realize assets, make distributions to creditors, and perform other duties as prescribed by the bankruptcy code and assigned by the court.

When a debtor files for bankruptcy, they must list all of their creditors in their bankruptcy schedules. The Insolvency trustee’s job is to review the schedules and records, meet with the debtor (the person who filed for bankruptcy), manage the bankrupt estate’s assets, and distribute funds to creditors following the bankruptcy code. The trustee is also responsible for ensuring that the debtor complies with the bankruptcy order terms.