If you have fallen behind on paying your rent, and are no longer in a position where you can pay off your rent arrears, then eviction may be a real concern.
Your landlord has the legal authority to issue a notice of termination if your rent arrears have accumulated and has become a reason to evict you.
At this time, filing for bankruptcy can actually help you overcome your situation.
Rent arrears come under unsecured debts in Canada.
Most unsecured debts are cleared when you file for bankruptcy, however this only applies to your rent arrears till the date you file for bankruptcy.
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Can your landlord evict you if you fail to pay your rent?
Your landlord cannot arbitrarily evict you from there property.
Even when you have rent due, your landlord will still have to follow through with prescribed procedures before they can make you leave their property.
The first thing your landlord must do is to provide a notice of eviction.
This notice must specify a valid reason behind why you are being asked to vacate the premises.
Failing to pay rent arrears does count as a valid reason to ask a tenant to vacate a certain property in Canada.
If the reason behind why your landlord wants you to move has to do specifically with rent arrears, and especially when that rent is paid on a monthly basis, your landlord has to give you a notice period of fourteen days before they ask you to leave.
Landlords have to submit a formal application to the Landlord and Tenant board if they want to get access to an eviction order.
Once they have received their eviction order, you will be presented with a Notice of Hearing.
At the hearing, the status of the eviction application is placed under review.
After this review, you may either be asked to pay your rent arrears or vacate the property by a date that will also be fixed at this hearing.
If you do not pay your rent arrears and also do not vacate your landlord’s property, then the Sheriff holding jurisdiction over the area may also issue a notice of eviction.
However, the way out of this is by making use of bankruptcy and invoking stay of proceedings.
What happens to your rent arrears when you apply for bankruptcy in Canada?
The Canadian federal structure can make use of the Bankruptcy and Insolvency Act to discharge all your unsecured debts until the date you filed for bankruptcy.
At the same time this also prevents your landlord from being able to evict you over rent arrears you haven’t paid to the date you filed for bankruptcy.
The only way to file for bankruptcy in Canada is through a licensed insolvency trustee.
When you have decided that you want to declare bankruptcy, you will need to approach a trustee.
These are the only people in the country that can officially submit a consumer proposal or file for bankruptcy for you.
The second you file for bankruptcy through your trustee, a ‘stay of proceeding’ will be activated that prevents eviction orders.
Once the application has been submitted, alongside your landlord, the board who heard your Notice of Hearing, can no longer ask you to leave.
Can I stay in the same property after I file for bankruptcy?
Whether you continue to stay in the same property or not is entirely dependent on you.
If you choose to stay, you may have to pay your rent on a per day basis, and this only applies your rent after the lockdown.
If you choose to stay and continue to not pay rent arrears your landlord can issue a new eviction notice and begin the process all over again.
The only time when filing for bankruptcy will not work in your favour is in your landlord is engaging in renovation, or if they want to demolish the property and build something else, or if they want to use the property for themselves and other situations where the reason behind eviction has to do with purposes other than rent arrears.
However, when rent arrears are the problem, then filing for bankruptcy can help you.
In order to file for bankruptcy in Canada, you will need to approach a trustee in bankruptcy.
This person will then speak with your landlord about the the arrears.
If no arrears involved then the trustee will not approach your landlord.
At this point, your landlord can ask the trustee to provide proof regarding the rent arrears until the case was filed.