Declaring Personal Bankruptcy in Manitoba

Declaring Personal Bankruptcy in ManitobaStruggling with mounting debt can be overwhelming and confusing for anyone. If you reside in Manitoba, Canada, declaring personal bankruptcy might be a solution you’re considering. This article will walk you through the process, the advantages, drawbacks, and other key factors to consider.

Understanding Personal Bankruptcy

Personal bankruptcy is a legal proceeding that provides relief to individuals who are unable to pay off their debts. Administered under the Bankruptcy and Insolvency Act of Canada, it offers a fresh financial start by eliminating many of your debts.

What is Personal Bankruptcy?

Personal bankruptcy is a legal status for an individual who cannot repay the debts they owe to creditors. In Canada, bankruptcy is governed by the Bankruptcy and Insolvency Act.

Who Can Declare Bankruptcy?

Any Canadian who owes at least $1,000 in unsecured debt and cannot repay it within a reasonable time is eligible to file for bankruptcy.

Manitoba Household Debt

Debt levels across Canada continue to rise, with the average level of household debt in Q2 of 2022 standing at about $46,577 according to Statistics Canada. This increase is attributed to factors such as lower interest rates, higher housing prices, and even rising incomes. Manitoba, however, has seen less severe debt levels, with an average debt of $18,815.

Bankruptcy Statistics in Manitoba

Though average consumer debt in Manitoba is lower than the national average, bankruptcy filings in the province have reduced by only 4.3% between September 2021 and September 2022, compared to a 12.4% reduction nationally. This suggests that more people in Manitoba are finding it difficult to pay their creditors.

The Process of Declaring Personal Bankruptcy in Manitoba

Here is a step-by-step guide to declaring personal bankruptcy in Manitoba:

Step 1: Find a Licensed Insolvency Trustee (LIT)

A Licensed Insolvency Trustee (LIT) is a professional authorized to administer bankruptcy and proposal proceedings. They play the key role of proposing your bankruptcy, providing financial counselling, and liaising with your creditors.

Step 2: Consultation with Your LIT

The next step is to meet with your LIT, who will review your financial situation and discuss all possible debt relief options with you.

Step 3: File for Bankruptcy

If bankruptcy is the best option, your LIT will prepare the necessary paperwork, which you will review and sign to initiate the bankruptcy process.

Once you’ve filed for bankruptcy, an “automatic Stay of Proceedings” is activated, offering immediate protection from your creditors. This means collection calls will stop, wage garnishments will cease, and any legal actions against you will be halted.

Benefits of Declaring Personal Bankruptcy

Here are some advantages of declaring personal bankruptcy:

  1. Immediate Protection: Upon filing, you receive immediate protection from your creditors.
  2. Elimination of Unsecured Debts: With some exceptions, bankruptcy eliminates all your unsecured debts.
  3. A Fresh Start: Bankruptcy offers a chance for a fresh financial start, enabling you to rebuild your finances without the burden of unsecured debts.

Drawbacks of Declaring Personal Bankruptcy

Declaring bankruptcy also has its drawbacks:

  1. Impact on Credit Rating: Bankruptcy can negatively affect your credit rating for up to seven years.
  2. Loss of Assets: You may have to surrender some of your property to pay your creditors.

It’s essential to weigh these pros and cons before making a decision.

Alternatives to Bankruptcy

Bankruptcy is not the only solution to debt problems. Your LIT can discuss other alternatives with you, such as a consumer proposal, informal debt settlement, or debt consolidation.


Declaring personal bankruptcy in Manitoba is a serious decision with both benefits and drawbacks. It’s advisable to seek the advice of a Licensed Insolvency Trustee to explore all your options. With the right guidance, you can navigate this challenging time and work towards a more secure financial future.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

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