Consumer Proposal Ontario
Bankruptcy Trustee in Ontario – Declaring Bankruptcy in Ontario
Bankruptcy in Ontario is a legal and honest method for Ontario residents to get out of debt.
By visiting our website you can learn about Ontario bankruptcy so if you are thinking about filing bankruptcy you can make the right decision.
You can also learn about making an Ontario consumer proposal.
Consumer Proposals are good alternatives to bankruptcy.
If you are ready to discuss bankruptcy further you can schedule a free, no obligation evaluation meeting with a bankruptcy trustee by calling one of our trustees listed above.
By reading the information on our website you can go to a consultation meeting with a bankruptcy trustee with a knowledge of bankruptcy and how bankruptcy in Ontario can help you.
If you are a first time bankruptcy filer you can receive a discharge of your eligible debts in as little as nine months.
Ontario Bankruptcy Trustees Can Provide You with Bankruptcy, Consumer Proposal and other debt relief Information.
Bankruptcy Ontario laws are provided for those debtors who are burdened with a hopeless debt load.
By going bankrupt you can receive a discharge of your debts and begin on the road to a fresh, stable financial life.
Many people who file bankruptcy in Ontario have no property that they will have to surrender to the bankruptcy trustee.
You can begin on the road to a “fresh start” by filing Bankruptcy Ontario.
In addition to bankruptcy, if you are struggling with debts you can make a Consumer Proposal to your creditors.
When you make a consumer proposal you will repay a portion of your debts over a period of 36 months to 60 months at a reduced interest rate.
If you have questions about Ontario bankruptcy you can schedule a free consultation meeting with one of our trustees, or you can visit our Bankruptcy FAQ page for answers to the most common bankruptcy questions.
If you are interested about filing bankruptcy but are worried about what belongings you will lose, you can look at the Ontario bankruptcy exemptions, to see what assets you can keep when filing bankruptcy or a consumer proposal in Ontario.
How to File for Bankruptcy in Ontario
Ontario residents who are overwhelmed with debt might at one point or another contemplated filing bankruptcy in Ontario.
Bankruptcy in Ontario, however, is only one option available to Ontario consumers in debt.
Other strategies that might be available for debtors trapped in debt in Ontario:
- Consolidation loan;
- Settling your debt on your own;
- Or filing a consumer proposal.
Ontario bankruptcy is a legal process, and you must use a Licensed Insolvency Trustee in Ontario (previously known as a bankruptcy trustee in Ontario) in order to file bankruptcy.
The first step in the Ontario bankruptcy process is to meet with a Licensed Insolvency Trustee in your area for a free consultation to discuss your options.
After you have received the information from the Trustee you can take your time to make a decision about what the Trustee has told you.
If you decide that you would like to go ahead with filing for bankruptcy, the Licensed Insolvency Trustee (LIT) will ask you to fill out the necessary bankruptcy forms and then the Trustee will submit these forms with the OSB (Office of the Superintendent of Bankruptcy).
Once the paperwork is filed with the OSB, you will be “bankrupt.”
This article will further explore the follow issues that a debtor should consider in their decision making process about filing for bankruptcy in Ontario:
How Long Will I Be in Bankruptcy?
Considerations in a Personal Bankruptcy
Guide to Filing Bankruptcy
Is Bankruptcy Right For Me?
Bankruptcy Ontario – How Long Will I Be in Bankruptcy?
Many Ontario consumers are concerned about how long it will take them to get out of bankruptcy.
A first time bankruptcy, where the debtor has no surplus income, will be over in 9 months and the bankrupt will receive their automatic discharge 9 months from the date of their bankruptcy filing.
The factors that will increase the time a person will be in bankruptcy are:
- Surplus income payments required;
- A second time bankruptcy;
- Opposition to a debtor’s discharge from bankruptcy;
- The bankrupt’s decision to purchase non-exempt assets from the Trustee.
Surplus Income Payments Extend the Time of the Bankruptcy: If you file for bankruptcy and your income is over a certain level set by the government for living expenses based on your family size, then you will be required to make surplus income payments to your Trustee for distribution to your creditors.
If you are required to make surplus income payments you will be required to pay 50% of the amount over the threshold for surplus income payments.
If you are a high earner, surplus income payments could add quite a lot to the cost of your bankruptcy, and you will be in bankruptcy longer, therefore you will be making larger payments for a longer period of time when you have surplus income payments to make.
When you are required to make surplus income payments, your bankruptcy will be extended by 12 months.
Therefore, a first time bankrupt with surplus income payments will be in bankruptcy for 21 months (9 months for a minimum bankruptcy + 12 month extension for surplus income requirements).
A Prior Bankruptcy Filing Increases The Length of a Second Bankruptcy: A first time bankrupt can receive a quick and easy discharge from their bankruptcy, especially if they do not have surplus income requirements.
However, a second bankruptcy is treated more seriously and the minimum time in which a bankrupt with a prior bankruptcy can receive their discharge is 24 months.
If you are filing a third bankruptcy, you will have to go to Bankruptcy Court and a judge will determine when you will receive your bankruptcy discharge.
Bankruptcy Ontario Discharge is Opposed: In certain cases the bankrupt’s discharge from bankruptcy, which is usually automatic, can be opposed.
In almost all cases, the debtor’s Licensed Insolvency Trustee will oppose the discharge.
The Trustee will usually oppose the discharge because the bankrupt failed to comply with their duties under the BIA (Bankruptcy and Insolvency Act).
Your creditors, and the OSB also has the ability to oppose your discharge, although this is rare.
Bankrupt Decides to Purchase Non-Exempt Assets From the Bankruptcy Estate: A person filing bankruptcy in Ontario is allowed to keep certain assets that are protected by the Ontario bankruptcy exemptions.
However, there are certain cases where a debtor filing Ontario bankruptcy will lose some of their non-exempt assets.
It is not uncommon for a bankrupt to purchase any non-exempt assets they would lose from their Trustee.
You are allowed to make installment payments to the Trustee to cover the equity in the non-exempt assets that you would like to purchase back from your bankruptcy estate.
Considerations in a Personal Bankruptcy
A debtor with unsecured debt who is considering filing bankruptcy in Ontario must take into account the follow considerations, which we will explore in further detail.
Not Everyone is Eligible for Ontario Bankruptcy
If you are experiencing financial difficulty you might think that filing bankruptcy is the right choice for you.
In order to be eligible to go bankrupt, you must owe at least $1,000 in unsecured consumer debt and you must also be insolvent.
A person is considered “insolvent” if they satisfy these two conditions as set out by the federal Bankruptcy and Insolvency Act:
Cannot meet your financial obligations as they are due for payment;
Your total debts outweigh your total assets.
Debtors that are not eligible for bankruptcy because they are not insolvent often do not meet the second requirement because they could pay their debts if they sold their home, other real property or other assets.
A debtor who has a large amount of equity in their home are not eligible for bankruptcy or a consumer proposal because they are not insolvent based on the fact their assets are larger then their debts.
What Debts are Eliminated by Filing Bankruptcy?
Before you make any decision about bankruptcy in Ontario you should have a complete understanding of what debts are eliminated by filing bankruptcy.
It is important to understand that not all debts can be discharged in bankruptcy.
There are three different types of debt and how each type is handled by bankruptcy is different.
Secured debt in bankruptcy: A debt in which your creditor has collateral in, such as a mortgage or car loan, is a secured debt.
Personal bankruptcy in Ontario will not eliminate or discharge any of your secured debt.
Unsecured debt: Unsecured debt is any other debt that is not secured by an asset or other collateral. Your unsecured debt will be eliminated when you receive your bankruptcy discharge.
Non-dischargeable debt: Even unsecured debt that falls into the non-dischargeable category won’t be discharged or eliminated in bankruptcy. Non-dischargeable debt includes court fines, student loans if you have not been out of school for at least 7 years, judgements and debt arising from fraud, and child and spousal support payments.
You Might Lose Certain Assets in a Bankruptcy
When you go bankrupt you will be required to transfer any of your non-exempt assets to your Trustee.
Ontario lists assets that you are able to keep under the bankruptcy exemptions, but if your equity is over the limit you are allowed to keep, you must surrender the asset to the Trustee.
If you are not able to keep your asset, you can purchase the equity from the bankruptcy estate from your Trustee.
Can I keep my Car in Bankruptcy?
In many cases a bankrupt can keep their car, because Ontario has a motorvehicle exemption of $6,600, which means if your vehicle is less than $6,600 you are able to keep your car when going bankrupt.
If your car is worth more than $6,600 then you can still keep your car if you pay the Trustee the difference in the equity from what you are allowed to keep to the value of the equity in the vehicle.
For example, if your car is worth $9,000 you can pay $2,400 to the Trustee – the difference between the value of the car and the $6,600 exemption for a motorvehicle.
Subsequently, if you were to surrender your vehicle and the Trustee was to sell it for $9,000 he would give the debtor the $2,400 difference.
Guide to Filing Bankruptcy in Ontario
The bankruptcy process is a legal process that follows certain steps.
Usually a person will consider bankruptcy after they have received a garnishment notice, have been sued by a creditor, have gone over the limit on their credit cards, have started to receive collection calls, or have lost their job.
There are many reasons why a person might consider filing Ontario bankruptcy.
Only a Licensed Insolvency Trustee Can File Bankruptcies
In order to file for bankruptcy in Ontario you need to use the services of a Licensed Insolvency Trustee; only a Trustee can file bankruptcy with the Office of the Superintendent of Bankruptcy.
You cannot file bankruptcy on your own, or use the services of any other debt relief expert.
There are a number of organizations and individuals that offer to provide debt assistance, but only a Licensed Insolvency Trustee can provide a full range of debt relief options.
Some consumers meet with a debt relief “professional” who charges a fee just to refer you to a Trustee.
The steps to filing bankruptcy in Ontario are as follows:
Initial Meeting With an Ontario Licensed Insolvency Trustee
The first step in the bankruptcy process is to meet with a Trustee to discuss all of your options and possible bankruptcy alternatives.
In many cases the Trustee can help you avoid bankruptcy by filing a consumer proposal, but if the Trustee recommends that you file bankruptcy you can feel confident that is the best solution for you as all Ontario Trustees are bound by a strict set of professional ethics.
Second Meeting With the Trustee
Once you are sure that you would like to proceed with filing bankruptcy, your Trustee will provide you all the necessary paperwork to fill out.
You should bring a number of documents with you such as proof your name, copy of your income tax return, copy of a recent paystub and copies of your bank account statements.
The Trustee will help you fill out this paperwork, which should take about an hour.
Once the paperwork is complete you will sign it.
The cost of filing bankruptcy is approximately $1,800 in Ontario in most cases, which can be paid at $200 a month for 9 months.
During this meeting the Trustee will ask you to surrender your credit cards, which you cannot keep in a bankruptcy.
Bankruptcy Forms are Submitted to the Office of the Superintendent of Bankruptcy
Once your LIT (Licensed Insolvency Trustee) has all of the necessary information and documents they will submit your paperwork with the Bankruptcy Court.
The two documents submitted to the Bankruptcy Court are the Statement of Affairs and the Monthly Income and Expense Statement.
The Statement of Affairs will include information about your creditors and the amount that is owed to each creditor.
Creditors’ Notified of the Bankruptcy
Once the bankruptcy has been confirmed by the Bankruptcy Court, the bankrupt is officially bankrupt and the stay of proceedings goes into effect.
The stay of proceedings stops all wage garnishments, lawsuits and collection calls from the unsecured creditors included in the bankruptcy.
The Trustee will also notify the debtor’s creditors that they have file bankruptcy.
The Trustee has 5 days to notify all of the unsecured creditors included in the bankruptcy.
Your creditors have the right to object to your bankruptcy, although this is incredibly rare at this stage.
Creditors that oppose a bankrupt’s discharge usually oppose the discharge later in the bankruptcy process.
Bankrupt’s First Counselling Session
As part of the bankrupt’s duties he must attend two counselling sessions to learn about money management and budgeting skills. The first of such meetings will occur after about 4 weeks from the bankruptcy filing.
Second Counselling Session
The second counselling session will occur approximately two months before the bankrupt is to receive their discharge. After this meeting has occurred, the Trustee will submit a report to the OSB advising them of the bankrupt’s actions during the bankruptcy, and if the bankrupt’s discharge is opposed.
If the bankrupt’s discharge is opposed, the Trustee will include a note about who is opposing the debtor’s discharge from the bankruptcy.
In most cases a discharge will be opposed because the debtor did not complete all of their duties.
Is Bankruptcy Right For Me?
For some consumers in Ontario facing a severe debt situation bankruptcy could be the ideal solution for them to get a fresh financial start.
However, for other consumers their unique circumstances means that filing personal bankruptcy is not the ideal solution for their debt problem.
Ontario Bankruptcy is ideal for individuals who:
- Have substantial unsecured debt;
- Have an income of less than $35,000 a year;
- Do not own shares in a corporation;
- Have no professional status;
- Do not have a large amount of assets;
- Have large student loan debts and have been out of school for at least 7 years.
Ontario Bankruptcy is not the ideal solution for individuals who:
- Have a high income;
- Own significant assets;
- Have shares in a corporation they must retain;
- Have a professional designation or employment status that would be affected by bankruptcy;
- Wish to operate a business.
Why You Should Use an Ontario Trustee in Bankruptcy
Bankruptcy Cost: A bankruptcy is more affordable than using other Canadian debt relief professionals because Ontario trustees have their costs regulated by the federal government.
Trustees Offer Many Forms of Debt Advice: In addition to helping people who have debts they cannot repay file for bankruptcy, bankruptcy trustees also can provide credit and debt counselling, help you negotiate with your creditors and can help you with making a consumer proposal; if you file a consumer proposal you can avoid bankruptcy.
Relief from Creditors: Bankruptcy trustees can guarantee that your creditors will stop contacting you and attempting collection actions against you if you file for bankruptcy, and they are the only debt professionals who can guarantee your creditors will stop harassing you.
Ethics: Ontario Bankruptcy trustees may refer you to a lawyer if you need legal advice, and in many cases will advise people who come to see them that they can get out of their debts without having to file bankruptcy or make a consumer proposal. Trustees have the most stringent code of ethics they must follow.
Bankruptcy Trustees Are Professionals: Before a bankruptcy trustee can receive their trustee license they must pass a three year bankruptcy and law course and be investigated by the police.
In addition to their university degree many trustees also have accounting certification.
Rebuild Your Credit Score Faster: By filing an Ontario bankruptcy or making a consumer proposal with the help of a trustee you can often rebuild your credit rating faster than if you use a credit counsellor.