Bankruptcy Options in Canada
What Bankruptcy Options are Available in Canada?
There’s not a single person in the world who would want to declare bankruptcy.
If you want to find out which options are available to you in Canada, then this is the guide for you.
Below you will find out everything you need to know about making the serious decision and you will also be able to find out if it is realistically an option for you.
What Bankruptcy Won’t Cover
Believe it or not, there are a few things that you should know about bankruptcy.
Sure, it might get rid of most of your debts, but there are some types of debt that bankruptcy won’t get rid of.
They include some secured debts, such as your mortgage and your car loan, and student loans too.
This is especially the case if they are under 7 years old.
Child and alimony payments that do not happen to be up to date won’t be covered either.
With credit card bills, if you have racked up a debt recently and now would like to go bankrupt then there’s a chance that creditors will stop you here, or they may even ask you to pay more.
If you know someone who has been through bankruptcy then they may tell you that it is an effective way for you to wipe the debt you have and to ultimately get a fresh start.
What they might not tell you is that it takes 9 months to complete, and that there are some costs and fees.
You will pay these to your trustee, and you will also be required to attend some bankruptcy sessions too.
Depending on the circumstances, there is a high chance that you will need to pay some extra money to your creditors too.
This will delay the process even more.
Assets which are above what you are allowed to keep will be flogged, or sold by your trustee.
These are the rules for Canada, and if you are not careful and if you do not take them into account then this will almost certainly work against you.
Your creditors, your trustee and even the Courts may choose to oppose or even delay the bankruptcy.
You might be asked to attend a hearing and in some instances, you will be required to answer some questions under oath.
This will help you to acquire your discharge, but it can be a long process.
Types of Bankruptcy
There are various types of bankruptcy that you can apply for.
Take a look below to find out more.
What is Personal Bankruptcy?
Personal Bankruptcy is where you will surrender any assets that are not exempt and you will also need to make specified payments to the trustee too.
The minimum threshold is only around $1,000, but if you want to be eligible then you also need to be insolvent.
If you can pay your debts in other words, you will not be able to file for bankruptcy.
If you have surplus income, then you can apply for a consumer proposal instead.
What is a Consumer Proposal?
A consumer proposal is an alternative process that is available for Licensed Insolvency Trustees.
You will get the same legal benefits of filing bankruptcy, but you will be able to keep all of your assets.
Your payments will be much more affordable too.
If you want to qualify for this then you have to make sure that your personal debt, not including your mortgage, is under $250,000.
What is a Division Proposal?
This is a debt settlement that is negotiated between the creditor and debtor.
This can be filed by those who have a total debt of over $250,000.
There are some differences between a division proposal and a consumer proposal.
If you are an individual, then you will be declared as being bankrupt if you happen to have your proposal rejected.
This is not the case with a consumer proposal.
What is Business Bankruptcy?
There is a lot of confusion over what constitutes as being a business bankruptcy.
Only corporations can file for corporate bankruptcy, and only they can be petitioned into bankruptcy through a creditor.
Most business bankruptcies require a business lawyer who can then deal with any issues.
Personal bankruptcies do not often require you to attend court.
If you cannot afford to pay your debt, then it’s always worth trying to contact an expert.
When you do you will then be able to get all of the support you need, and this can help you greatly.
Contact Bankruptcy Canada today to find out more.