Bankruptcy Protection in Canada

Filing for Bankruptcy Protection in Canada

As a status given to a consumer debtor or a business debtor after they have filed bankruptcy, Bankruptcy Protection is set out in the Bankruptcy & Insolvency Act.

In order to receive this protection an individual or business owner can assign themselves into bankruptcy voluntarily, or in rare cases creditors can petition the court to assign someone into bankruptcy.

The Canadian insolvency laws that cover insolvency protection were written into law to allow people and businesses who are struggling with their debts to restructure or eliminate their debts so they can begin rebuilding a stable financial future after getting their fresh start through a bankruptcy discharge or receiving the “Certificate of Full Performance” if you have filed a consumer proposal.

Federal and Provincial Bankruptcy Law Will Impact Your Protection Received in Bankruptcy

Bankruptcy law has bankruptcy protection rules that are included in the Bankruptcy and Insolvency Act, which is a federal law.

Your protection can be impacted by your provincial laws, as the province sets the assets that you can keep when filing for bankruptcy, although bankruptcy is a federal law.

The provincial sets of laws relating to protection through bankruptcy or a consumer debt proposal work in conjecture with the national insolvency protection laws.

If you are seeking bankruptcy or consumer proposal protection as a way of dealing with your debt you need to use the services of a bankruptcy trustee as only a trustee in bankruptcy is licensed to file a bankruptcy with the Office of the Superintendent of Bankruptcy.

Bankruptcy protection gives you protection from creditor collection actions and gives you protection while you are in bankruptcy and seeking a fresh start; when you receive your bankruptcy discharge (automatic and usually in 9 months) your debts will be discharged; under the bankruptcy laws you can also have your debts restructured through a consumer proposal.

Are There Different Types of Bankruptcy Protection in Canada?

In Canada you can seek insolvency protection through personal bankruptcy, business bankruptcy or through a consumer proposal, which is part of the Bankruptcy and Insolvency Act.

These are the different types of bankruptcy relief you can receive in Canada with the help of a licensed insolvency trustee (LIT, or formally known as a bankruptcy trustee).

Facts About Bankruptcy Protection

When you seek insolvency protection in Canada you might lose certain assets although you will receive a discharge of all of your eligible debts and will be able to get out of bankruptcy in as little as 9 months.

At this point you will no longer need bankruptcy protection because your debts will be wiped out.