10 Steps to Filing Bankruptcy in Canada : How to Go Bankrupt

Sometimes, the only option you have is to file for bankruptcy and clear unsecured debts.

While it may not be ideal, it is an excellent way to wipe the slate clean and offer breathing space.

Thankfully, it’s also an easy process that’s relatively quick and straightforward to understand.

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Here are the 10 steps to filing bankruptcy in Canada.


#1: Spot The Warning Signs


A quarter of Canadians say that they struggle to make ends meet.

A further 40% believe they’ll never be debt-free.

You fall into this category if you’re in denial about your finances.

The key is to spot the signs and then reach out for help from a professional.

You need expert assistance if your outgoings are more than your income, or if you’ve received a garnishment order from collection agencies chasing up money.


#2: Speak To A Trustee


A Licensed Insolvency Trustee (LIT) is the person who will craft the foundation of your debt-relief plan.

During a meeting, they’ll ask you to provide information regarding income, debts (including expenses), and assets.

From this information, your LIT will help you decide whether filing for bankruptcy is the right move.

Our LIT finding tool is all you need to locate a trusted and knowledgeable professional in your region.


#3: Gather More Information


The initial meeting is a no-obligation get-together that highlights your options.

Once you decide to file, your trustee will ask you to gather info.

This will include, but isn’t limited to:


  • Creditor details – name, address, basic business information
  • Assets you own – what are they? How much are they worth? Are they secured or unsecured?
  • House appraisal – selling your home is a last resort, but it could be necessary


#4: Trustee Prepares Paperwork


You don’t have to do anything while your trustee prepares the paperwork.

He or she will use the data you have provided to procure the necessary documents.

This can take a while as there are lots of forms regarding bankruptcy on the Office of the Superintendent of Bankruptcy website.

There are almost 100 in total, so it is essential to be patient.

However, if you haven’t heard from your trustee, you should contact them and ask for relevant updates.


#5: Sign The Documents


The next time you arrange to meet your trustee, they will ask you to sign documents that they will later file to bring the process to an end.

Of course, it is a tricky time because you will be anxious about putting pen to paper.

With this mind, it’s essential to go over any questions you may have, no matter how obvious the answers seem.

A quality trustee always starts discussions by asking if you have any queries, so don’t be afraid to press them for information.

Every document you sign will be explained beforehand so that you understand what it is you’re agreeing to.


#6: Trustee Sends Off Application


This is the official start of bankruptcy proceedings.

The trustee finalizes the forms, with your consent, and transfers them to the Office of the Superintendent of Bankruptcy.

They can do this electronically, so don’t worry about having to attend the OSB.

They accept applications by mail, fax, or email.

Your creditors are copied into the thread, too.

As a result, you should stop hearing from them because they will know that you’re in the process of being declared bankrupt.

However, if you do, you merely need to give them the Estate Number on your Certificate of Appointment.

The number is proof that your bankruptcy claim is legally binding, and prevents debtors from continuing to chase the debt.


#7: Maintain Your Responsibilities


Now it’s up to you to keep to the terms of the agreement.

For example, a standard bankruptcy agreement will require you not only to make regular payments but to attend counseling sessions.

You must go to at least two to be discharged, and they may not be with your trustee.

Still, there isn’t anything to worry about because the goal of the meetings is to help you to learn how to manage your finances in the future.

Bankruptcy is a second chance, and counseling attempts to ensure you don’t waste it by making the same mistakes.


#8: Calculate Income


While an amount is set initially, it may not stay that way forever.

How much you have to pay creditors is based on something called ‘Surplus Income.’

To make it fair on both parties, your trustee will calculate your average income after seven months to see if you can pay more.

The way it works is simple – you keep a portion of the money to cover living expenses.

Anything over that amount, the surplus, is paid to your creditors up to 50%.

The amount is calculated so that you can afford to make the payments, so your lifestyle will never be in jeopardy.

Also, the more you pay, the quicker you will be discharged from your bankruptcy agreement.


#9: Discharge


The calculations take place over some time and are recalculated regularly.

Once you pay off your debts, and as long as you have fulfilled the terms of the plan, you will receive a certificate from your trustee.

They get it by informing the Office of the Superintendent of Bankruptcy of your impending discharge.

When you get a copy of the certificate, it acts as proof that you are legally released from the debts included in your plan.


#10: Rebuild Your Score


Last but not least is the process of rebuilding your credit rating.

This is the most critical step to filing bankruptcy papers as it enables you to secure finance once again.

Although it’s tough, it is doable if you pay bills on time and only make affordable purchases.

A savvy piece of advice that you must remember is to obtain a credit card.

Your score will stop you from applying for traditional cards, but a secured credit card should help you to repair your rating.

Bankruptcy Canada


At Bankruptcy Canada, we will help you find experienced and dedicated trustees who will guide you through the bankruptcy process.


Call us now to transform your finances and your lifestyle!

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

Gordon Sands

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