Canadian Bankruptcy Law

What Are The Canadian Bankruptcy Laws?

If you’re experiencing debt problems and you want to resolve your financial issues, it’s important to consider every possible option.

By learning more about Canadian bankruptcy law, you can understand the pros and cons associated with filing with bankruptcy and determine whether it’s the right course of action for you.

If so, you’ll find it easy to access the professional advice and assistance you need too.

Bankruptcy is a legal process that is governed by the Bankruptcy and Insolvency Act.

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While other forms of debt relief do exist, it’s only consumer proposals and bankruptcy that are considered to be legal processes.

Due to this, they tend to offer the most effective way to reduce or eliminate your debts.

In the case of bankruptcy, a wide variety of debts can be written off.

This means you will no longer be liable for them and you won’t have to make any more repayments towards them.

Essentially, filing for bankruptcy frees you from your liabilities and enables you to restart your finances.

How Does Bankruptcy Law Work?

Bankruptcy is designed to allow people to overcome their financial issues if they’ve fallen into debt problems.

However, it isn’t meant to be an easy way to avoid your liabilities and simply walk away from your creditors.

Instead, bankruptcy should be used by people who have attempted to repay their debts in accordance with the relevant terms but have, unfortunately, been unable to do so.

As well as defining the bankruptcy process, Canadian bankruptcy law stipulates a range of pre-requisites, regulations and obligations, such as:


  • Who is permitted to file for bankruptcy or make a consumer proposal;
  • What assets must become property of the Trustee and which are exempt from a bankruptcy;
  • Duties of the bankrupt individual to provide the Trustee with specific information relating to their finances;
  • Setting aside transfers if it is presumed that they have been made in order to avoid them becoming property of the Trustee;
  • Setting aside any preferential payments which have been made to creditors prior to bankruptcy proceedings being instigated;
  • Specific procedures regarding creditor investigation into the debtor’s claims;
  • Regulations for determining how much surplus income the individual is required to pay;
  • Provisions for filing and administering consumer proposals;
  • Rules regarding the calculation of the Trustee’s fees and disbursements;
  • Procedures and guidelines for how the process is to be managed by the Bankruptcy Court;
  • Confirmation of debts which are not discharged under a bankruptcy or consumer proposal;
  • Confirmation of offences which, if made by the bankrupt individual, could result in a fine and/or imprisonment.


As you can see, Canadian bankruptcy law sets out all of the rules and regulations pertaining to the procedure.

However, identifying the relevant legal provisions and fully understanding them can be difficult.

With 14 parts to the Bankruptcy and Insolvency Act, it can take quite some reading before it’s possible to fully interpret the law regarding this form of debt relief.

Although it can be helpful to look at the Bankruptcy and Insolvency Act, it’s unlikely that this will provide you with all the information you need.

Unless you have a legal background, the dry and somewhat archaic language may leave you with a number of questions.

Fortunately, you won’t need to investigate bankruptcy as a form of debt relief on your own.

Get Bankruptcy Help Now

As bankruptcy and consumer proposals are legal processes, they must be dealt with by licensed insolvency trustees (LITs).

These are regulated professionals whose job it is to manage the process and ensure you are meeting your obligations under the bankruptcy.

In addition to this, your licenced insolvency trustee can provide you with any information you need and clarify certain points if you’re unsure of them throughout the proceedings.

Crucially, you don’t need to file for bankruptcy before you’re allowed to communicate with a LIT.

In fact, a licensed insolvency trustee is often the best person to speak to if you’re looking for debt relief solutions or you’re considering filing for bankruptcy.

With specialist knowledge and expert insight into both bankruptcy and consumer proposals, a licensed insolvency trustee can provide all the information you need when you’re deciding whether or not to pursue either of these options.

Furthermore, a LIT can put the law into context and tell you how it would apply to your specific situation.

To speak to a licensed insolvency trustee today, contact us at Bankruptcy Canada now on 877-879-4770.

Can You Clear Your Debts By Filing For Bankruptcy?

Once your bankruptcy has been discharged, the debts it includes are eliminated.

Although most debts can be included when you file for bankruptcy, secured debts are not usually dealt with in this way.

Any debt which has been secured by an asset, such as a car loan for a vehicle or a mortgage on your house, isn’t eliminated by filing for bankruptcy.

However, unsecured loans are almost always included in personal bankruptcies.

If you have credit card debt, personal loans or payday loans, for example, this could be eradicated when your bankruptcy is discharged.

In addition to this, many government-related loans, such as student loans, can be included in your bankruptcy.

Although there are rules regarding how old your student loans must be for them to be covered by a bankruptcy it is possible for you to eliminate your student loans using this legal process.

The need to pay child support and/or alimony payments isn’t discharged by bankruptcy, nor are debts you’ve built up due to fraud or fines and charges which have been imposed by the court system.

Aside from these, however, the vast majority of your debts can be dealt with via bankruptcy.

To discuss your situation in more detail, talk to our friendly team today.

We’re available 24 hours a day, 7 days a week, so you can always talk to a reputable professional in the strictest confidence.

If you’ve been struggling to deal with your debts, why struggle any longer?

Contact Bankruptcy Canada now on 877-879-4770 and access the help you need.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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