If you are considering filing bankruptcy you should be aware of the rules in the Bankruptcy and Insolvency Act that will impact you the most.
These rules could impact your decision about whether to file bankruptcy or make a consumer proposal.
Important Insolvency Rules
* When you go bankrupt, you will be required to provide your trustee with a list of all of your liabilities (debt) and assets and provide proof of your income.
One of the bankruptcy rules dictates that the more you earn the more you have to pay when you go bankrupt so your income can impact the cost of your bankruptcy;
* The length of your bankruptcy will also be increased by 12 months if you have surplus income (excess income over a limit set by the government);
* You will not lose everything because Canadian bankruptcy rules include a list of exempt property that a bankrupt can keep when filing bankruptcy so they can have a fresh start;
* Bankruptcy can only eliminate your student loan debt if you have been out of school for at least 7 years (under certain conditions this can be reduced to 5 years) while if you file a consumer proposal, you can restructure your student loan debt in a proposal at any time;
* Your bankruptcy trustee will file your tax returns for you for the year of your bankruptcy and you will lose any GST credits or tax refunds you are entitled to;
* You won’t be able to include secured debts in bankruptcy although you will be able to keep all of your secured assets if you continue to make the payments, or you can choose to surrender the secured asset to your trustee to be released from the payments;
* Your secured lenders won’t be able to seize your secured assets if you file bankruptcy if you continue to make the payments as agreed;
* If you are filing a consumer proposal you must not have debts of more than $250,000 (not including the mortgage debt on your principal residence). A special kind of proposal is available if you have debts greater than $250,000.
How Can I Learn More About the Canadian Bankruptcy Rules?
If you would like to learn more about the Canadian bankruptcy rules please don’t hesitate to contact one of Bankruptcy Canada’s Licensed Insolvency Trustees to get answers to all of your questions and to discuss the bankruptcy rules in Canada.
Contact a local bankruptcy trustee today at 1-877-879-4770 toll free or contact us online.