A Comprehensive Guide: 10 Essential Facts About Personal Bankruptcy in Canada
Bankruptcy, a term that often elicits fear and confusion, is essentially a legal process that provides relief to individuals struggling with overwhelming debt. In Canada, this process is not as daunting or complicated as it might seem. In this guide, we aim to shed light on the top 10 facts about personal bankruptcy in Canada, which you must know.
1. Eligibility for Bankruptcy and Getting Assistance
Contrary to common misconceptions, bankruptcy in Canada is a voluntary process. An individual, burdened with excessive debt, seeks out relief through this legal process. Strikingly, the threshold for qualifying for bankruptcy in Canada is quite low, making it an accessible option for those grappling with debt.
Primary Fact: To declare bankruptcy in Canada, you must owe a minimum of $1,000 and be insolvent, unable to repay all your debts.
It’s important to note that while the eligibility criteria are straightforward, the process requires professional assistance. A Licensed Insolvency Trustee (LIT) is the only professional authorized to administer bankruptcy proceedings in Canada. Therefore, the first step towards debt relief is to connect with a LIT for a free confidential debt consultation.
2. Creditor Permission is Not Required
A major advantage of bankruptcy proceedings is that your creditors cannot prevent you from seeking this financial fresh start. You don’t require their permission or any court application to initiate bankruptcy.
3. Role of a Licensed Insolvency Trustee
Getting through the bankruptcy process requires the guidance and administration of a Licensed Insolvency Trustee. These professionals, the only ones duly authorized to facilitate bankruptcy in Canada, help you navigate this process without the need for a lawyer or self-representation.
Intriguing Fact: You might also work with an Insolvency Estate Manager and a Qualified Insolvency Counsellor during the bankruptcy process.
To get started, you need to find a Licensed Insolvency Trustee in your province.
4. Debt Forgiveness and Asset Protection – Advantages of Filing Bankruptcy
Bankruptcy is a powerful debt solution that can eliminate virtually all your debts. While some debts like court-imposed fines, alimony, and maintenance payments are exceptions, most other debts can be discharged through bankruptcy. This includes general consumer and business debts, tax debts with the Canada Revenue Agency, and even student loans.
Moreover, filing for bankruptcy also provides an automatic stay of proceedings, which halts all harassing phone calls, wage garnishments, or any other collection actions against you.
5. Asset Retention in Bankruptcy
Contrary to popular belief, bankruptcy does not mean you have to give up all your assets. The BC’s Court Order Enforcement Act designates many assets as “exempt”, allowing you to retain them during and after bankruptcy.
6. Duration and Credit History Impact
Most people perceive bankruptcy as a long-term process that severely damages their credit history. However, the reality is quite different. In most cases, an individual can be discharged from bankruptcy in just nine months, provided they have completed the required duties.
While your credit report will reflect your bankruptcy for six years from the date of discharge, this doesn’t mean you cannot apply for and receive new credit during this period.
7. Privacy in Bankruptcy
Bankruptcy is a relatively private process in Canada. Apart from your creditors, your Licensed Insolvency Trustee, and the Office of the Superintendent of Bankruptcy, no one else is typically aware of your bankruptcy.
8. Cost of Filing for Bankruptcy
The cost of filing for bankruptcy in Canada is minimal and is usually paid by the individual declaring bankruptcy. These costs are set and calculated by government tariff, not by an hourly fee for service. In most bankruptcies, the direct cost to the person filing is $2,300.
9. Debt Stress and Bankruptcy
Being under the strain of debt can be a stressful experience, but remember, you are not alone. Bankruptcy offers a viable solution to overcome the stress and regain financial stability.
10. Free Consultation and Support
Licensed Insolvency Trustees offer free, confidential, and non-judgmental consultations to understand your situation and explore potential solutions. They aim to provide a transparent and ‘no surprises’ experience, helping you make an informed decision about your financial future.
In conclusion, understanding these 10 facts about personal bankruptcy in Canada can empower you to make informed decisions about your financial situation. It’s important to remember that bankruptcy is not the end but a fresh start towards a debt-free life. If you’re considering bankruptcy, consult with a Licensed Insolvency Trustee to understand all your options.
