Sometimes, life can be so hard that things just don't work out the way you had hoped. It can feel like there is nothing left in your life. While this might be true in some situations, there are other ways to overcome these hardships without giving up altogether. This is where Bankruptcy comes into play. It can help give people a fresh start when things have gotten too overwhelming for them to handle.
Filing for bankruptcy is a legal process that allows individuals to have all of their debts forgiven while also providing protection from creditors. This can be an extremely helpful tool for those struggling with debt, but it is important to understand the steps involved and the potential consequences before moving forward.
When Bankruptcy becomes the only option, you should know your rights. The process of filing for Bankruptcy can be a little complicated, but it can also be very beneficial to your financial state. There are certain things that you need to understand before going through the process. Once you have reviewed the material, you will have a better understanding about what is involved. Don't let the fear of filing for Bankruptcy stop you from taking action.
How To File For Bankruptcy
Bankruptcy in Canada is governed by the Bankruptcy and Insolvency Act (BIA) and there are certain eligibility requirements that must be met to qualify. Once you have filed for bankruptcy, an automatic stay of proceedings will come into effect which means that creditors are no longer able to contact you or take any legal action against you.
The process to file bankruptcies in Canada is relatively straightforward. The first step is to speak with a Licensed Insolvency Trustee (LIT) to discuss your financial situation and determine if Bankruptcy is the right solution for you. If it is, the LIT will help you gather all the required documentation and officially file for Bankruptcy.
Reasons For Filing Bankruptcy
The most common reason people file for Bankruptcy in Canada is that they cannot pay their debts. This can be due to a number of reasons, including job loss, illness, Mounting credit card debt, and poor financial planning. Sometimes people get in over their heads and simply can't make ends meet. When this happens, they may have no choice but to file for Bankruptcy.
Another common reason people file for Bankruptcy is because they have been hit with a major life event that has left them unable to pay their debts. This could include things like a divorce, the death of a spouse, or a major medical bill. Sometimes these events are out of our control and leave us with no other options but to declare Bankruptcy.
In some cases, people may also file Bankruptcy due to unmanageable financial debts from gambling or other risky investment choices. No matter the reason, filing for Bankruptcy is often a difficult decision that should be made only after careful consideration and consultation with a qualified legal professional.
Benefits Of The Bankruptcy Process
When you're struggling with unmanageable debt, it can be hard to know what to do. There are a lot of options out there, and it's important to choose the one that's right for you. For some people, filing Bankruptcy may be the best option. Here's why:
- Filing bankruptcy can help you get a fresh start. If you're buried under a mountain of debt, Bankruptcy can give you a way to start over. It can allow you to get rid of most or all of your debts, which can give you some much-needed relief.
- Bankruptcy can stop creditor harassment. If you're being constantly hounded by creditors, filing bankruptcy can put a stop to that, providing some much-needed peace of mind.
- Interest accumulation will stop when you file for Bankruptcy. This is because your creditors will be legally required to stop trying to collect from you once your Bankruptcy is finalized. However, it's important to note that filing for Bankruptcy will not erase your debts completely; you'll still be responsible for paying off the principal balance of what you owe.
- Bankruptcy can help you avoid foreclosure on your home or repossession of your car. When you file for Bankruptcy, an automatic stay is put into place. This means that creditors are not allowed to take any collection activity against you, including foreclosing on your home or repossessing your car. The automatic stay will remain in effect until your bankruptcy case is complete or you request that the court lift the stay.
- You may be able to keep some of your property. Although you may have to give up some of your assets if you file Bankruptcy, there are certain types of property that are exempt from being liquidated. You may be able to keep your home or car if you're current on payments and your equity is below a certain amount. However, the list of exempt items varies from state to state, so it's always best to consult with a licensed insolvency trustee in your area to see what property you'll be able to keep.
- Bankruptcy can help improve your credit score over time. Although filing Bankruptcy will have a negative impact on your score, the effect is only temporary. Your credit rating will improve over time, especially if you make an effort to pay your debts on time in the future.
Although Bankruptcy has many potential benefits, it's important to understand that it's not for everyone. It is a serious decision that should be considered carefully and discussed with a qualified professional before moving forward.
Steps To Filing Bankruptcy In Canada
Get a Free Debt Assessment to Understand Your Situation
The steps in filing bankruptcy start by getting a Debt Assessment. It is an important process that will help you understand your debt management options and the potential consequences of each. Bankruptcy can be a life-changing event, and it is important to make sure that you are making the best decision for your situation. A Debt Assessment will help you understand the different types of Bankruptcy available to you and how they could impact your credit score, assets, and future job prospects. It is also helpful to get an idea of how much debt you could potentially discharge when you file for Bankruptcy.
Choose a Licensed Insolvency Trustee
A Licensed Insolvency Trustee (LIT) like Risman Zysman, Inc. is a professional who is licensed by the federal government to help people file for Bankruptcy. We will be able to help you understand the bankruptcy process and what it entails. It's important to choose a LIT that you feel comfortable with and trust to give you honest advice about your situation.
A LIT is responsible for managing your bankruptcy estate, ensuring that your creditors are paid, and providing information and counseling to debtors and creditors. There are numerous factors to consider when choosing a LIT. Here are some of the things you should keep in mind:
- Check whether the LIT is qualified. All LITs must be licensed by the Office of the Superintendent of Bankruptcy.
- Consider the location of the Trustee's office. If you live in a rural area, you may want to choose a Trustee who has offices in multiple locations.
- Ask about the Trustee's experience. It's important to choose a LIT who has extensive experience dealing with bankruptcies.
- Find out what type of support the Trustee offers. Some LITs provide evening and weekend appointments to accommodate their clients' schedules.
- Inquire about the fees charged by the Trustee. Many LITs offer clients a free initial consultation to discuss their bankruptcy options, so be sure to take advantage of this service before choosing a Trustee.
If you want to declare Bankruptcy, it is important to seek professional advice to ensure that it is the right decision for your situation. Bankruptcy can have a major impact on your life, so be sure to meet with your Trustee and be fully informed of the pros and cons before making a decision.
What Forms Do I Sign To Declare Bankruptcy?
After you have consulted with a Licensed Insolvency Trustee and decided that Bankruptcy is the right choice for your situation, you will need to sign at least two forms to officially declare Bankruptcy. These are the "Assignment" and "Statement of Affairs". The bankruptcy assignment is a legal document that transfers your assets to your Licensed Insolvency Trustee. The Statement of Affairs is a form that lists all of your debts, assets, and monthly expenses.
Your LIT will help you fill out these forms and understand the information that you are required to provide. Once you have signed these forms, your Bankruptcy will be official, and your assets will be transferred to your Trustee.
What Happens After I File Bankruptcy?
After you file Bankruptcy, the court appoints a trustee to take control of your estate. The Trustee will review your bankruptcy petition and schedules and notify your creditors of your filing. Your LIT will then begin the process of contacting your creditors and informing them of your Bankruptcy. Creditors are not allowed to contact you directly once they have been notified of your Bankruptcy. However, if a creditor does attempt to contact you, you can refer them to your Trustee.
Creditors have three options once they are notified of the bankruptcy filing: they can file a proof of claim (a document laying out the amount of money they believe they are owed), ask to be discharged from the case, or object to discharge. If no creditor files a proof of claim, the Trustee will likely abandon (or "discharge") that debt.
The automatic stay goes into effect as soon as you file for bankruptcy protection. This stay prohibits creditors from continuing any collection actions against you, including seizing property, garnishing wages, or harassing phone calls. In some cases, the automatic stay may be lifted if creditors show that continued collection actions against you are necessary to protect their interests.
Your Trustee will also begin the process of selling your non-exempt assets. Non-exempt assets are assets that you are allowed to keep, such as your home and car. Exempt assets are items that are protected from seizure by the bankruptcy court, such as tools of the trade, household goods, and clothing.
The proceeds from the sale of your non-exempt assets will be used to pay back your creditors and cover any outstanding fees. Once all of your debts have been discharged, and your Bankruptcy is complete, you will begin the process of rebuilding your financial life.
Complete Your Bankruptcy Duties
Individuals who have filed for Bankruptcy have certain duties and responsibilities that they must adhere to navigate the process successfully. Some of these duties may include attending mandatory meetings with your Trustee, providing the Trustee with updated financial information on a regular basis, and completing an approved financial management course. Other requirements may be stipulated in your particular bankruptcy proceeding, so it is important that you remain tipped about any new developments or changes to ensure you are in compliance. Failure to complete any of these obligations can result in having your case dismissed, which can lead to unwanted consequences.
Receive your Certificate of Discharge
When your Bankruptcy is complete, you will receive a Certificate of Discharge that officially ends your Bankruptcy and relieves you of the obligation to make any further payments. This certificate is an important document that proves that you have successfully completed the bankruptcy process and can be used to rebuild your financial reputation.
You can obtain your certificate of discharge from the bankruptcy court once your case has been completed. The court will mail the discharge certificate to you, and it will also be available online through the court's website. If you need a copy of your discharge certificate for tax purposes or as proof of payment to creditors, you can request one from the court clerk's office. There is usually a small fee for this service.
Schedule a Free Debt Assessment
If you are struggling with debt and aren't sure what your next steps should be, it can be helpful to schedule a free, no-obligation debt assessment with Risman Zysman Inc. We have been helping people in financial difficulty for decades, and our team can help you understand all of your options. We will work with you to develop a personalized plan to get out of debt, and we will be there with you every step of the way. Contact us today to schedule your free debt assessment.