Bankruptcy Manitoba

How to Declare
Bankruptcy in Manitoba

Household debt levels in Canada have been steadily rising, and Manitoba is no exception. With the average level of household debt in Canada reaching $46,577, it’s crucial to explore debt relief options to regain control over your finances. While Manitoba has seen some improvement in bankruptcy filings, there is still room for progress. In this comprehensive guide, we will discuss the advantages, disadvantages, and steps involved in filing for bankruptcy in Manitoba. Whether you’re struggling to repay your creditors or seeking a fresh financial start, bankruptcy may provide the relief you need.


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Advantages of Filing for Bankruptcy in Manitoba

Immediate Protection from Creditors

One of the significant benefits of filing for bankruptcy in Manitoba is the immediate protection it offers from your creditors. Once you file for bankruptcy, an “automatic Stay of Proceedings” comes into effect. This means that collections calls, wage garnishments, frozen bank accounts, and legal actions against you will stop. This relief provides you with the space and time you need to address your debt problems without constant pressure from creditors.

Elimination of Unsecured Debts

Bankruptcy in Manitoba allows for the elimination of most unsecured debts. Upon receiving a discharge from bankruptcy, you are no longer obligated to pay the unsecured debts that were discharged. However, certain debts such as child support and alimony, student loans less than 7 years old, court fines and penalties, and debts resulting from fraud or misrepresentation cannot be discharged through bankruptcy.

Fresh Financial Start

Once your unsecured debts are behind you, bankruptcy offers you the opportunity to create a financial plan that aligns with your priorities. You can focus on building a better financial future for yourself and your family, free from the urgent demands of debt collectors. Bankruptcy can provide a fresh start where you can make informed financial decisions and learn from past mistakes to avoid falling into significant debt again.

How to File for Bankruptcy in Manitoba

Filing for bankruptcy in Manitoba involves a straightforward process that begins with finding a Licensed Insolvency Trustee (LIT) and ends with the discharge of your bankruptcy. Here are the steps involved:

Step 1: Find a Licensed Insolvency Trustee (LIT)

To initiate the bankruptcy process, you need the assistance of a Licensed Insolvency Trustee. LITs are professionals authorized, licensed, and regulated by the Federal government of Canada to guide individuals through bankruptcy. They provide financial counseling, communicate with your creditors, and manage any payments received on behalf of your creditors.

Step 2: Meet with Your Licensed Insolvency Trustee

Before proceeding with bankruptcy, it’s essential to explore all your debt relief options. Your Licensed Insolvency Trustee can provide you with a comprehensive review of your current financial situation and discuss the various solutions available to you. This initial consultation will help you make an informed decision about whether bankruptcy is the right path for you or if an alternative solution would be more suitable.

Step 3: File for Bankruptcy

If you decide that bankruptcy is the best option for your circumstances, your Licensed Insolvency Trustee will guide you through the necessary paperwork. You will need to provide personal details, a list of creditors, and a list of your assets. Your LIT will review the documents with you to ensure accuracy and your understanding of the process. Once you sign the paperwork, your bankruptcy begins, and your creditors will be notified.

Obligations and Duties during Bankruptcy

Once you file for bankruptcy in Manitoba, you will have certain obligations and duties to fulfill as outlined in the Bankruptcy and Insolvency Act of Canada. These include:

  1. Monthly Income Statements: You are required to provide a monthly income statement to your Trustee, which outlines your income and expenses during the bankruptcy period.

  2. Credit Counseling Sessions: Attendance at two mandatory credit counseling sessions is mandatory. These sessions provide valuable financial education and guidance to help you manage your finances more effectively.

  3. Updated Contact Information: It’s crucial to keep your Trustee updated with your current contact information throughout the bankruptcy process.

  4. Tax Information: You must provide your Trustee with relevant tax information so that your tax returns can be filed accurately.

Additionally, you will be required to make monthly payments to your Trustee. The amount of these payments is determined based on your ability to pay, considering the guidelines set by the federal Superintendent of Bankruptcy. If you have excess income, you will be required to contribute 50% of that income to your Trustee for the benefit of your creditors.

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Drawbacks of Filing for Bankruptcy in Manitoba

While bankruptcy can provide significant relief from overwhelming debt, it’s essential to consider the drawbacks before making a decision. Some of the potential disadvantages of filing for bankruptcy in Manitoba include:

Negative Impact on Credit Score

One of the most significant drawbacks of bankruptcy is its impact on your credit score. A bankruptcy filing will remain on your credit report for six years after your discharge. This can make it challenging to obtain new credit during that time. However, it’s important to remember that if you’ve been consistently missing payments or falling behind on bills, your credit rating may already be affected.

Property Surrender and Wage Garnishment

In some cases, bankruptcy may require you to surrender certain assets to repay your creditors. This can include personal belongings, professional equipment, and even a portion of your home equity. Additionally, there may be a period where your wages are garnished to satisfy outstanding debts. However, Manitoba has specific property exemptions that allow you to retain certain assets, providing some protection during the bankruptcy process.

Restrictive Financial Activities

During the bankruptcy process, there are certain restrictions on your financial activities. For example, you cannot serve on the board of directors of a corporation or hold a trust account until your bankruptcy is discharged. You must also disclose your bankruptcy status when starting a new trade or business.

Alternatives to Bankruptcy in Manitoba

While bankruptcy may be the right solution for some individuals, there are alternative debt relief options to explore before making a final decision. These alternatives include:

Consumer Proposal

A consumer proposal is a formal agreement between you and your creditors to repay a portion of your debt over a specified period. It allows you to avoid bankruptcy while still reducing your debt burden. A consumer proposal remains on your credit report for three years after your last payment.

Informal Debt Settlement

Informal debt settlement involves negotiating with your creditors to reach a mutually agreeable repayment plan. This option is typically pursued when the debt amount is lower, and creditors are willing to negotiate more flexible terms.

Debt Consolidation

Debt consolidation involves refinancing your home or applying for a loan to cover your debts. This allows you to consolidate multiple debts into a single monthly payment with a reduced interest rate. It provides a more manageable repayment plan and simplifies your financial obligations.

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Bankruptcy in Manitoba can provide immediate protection from creditors, eliminate unsecured debts, and offer a fresh financial start. However, it’s crucial to consider the potential drawbacks and explore alternative debt relief options before making a decision. Consulting with a Licensed Insolvency Trustee is essential to understand your specific financial situation and determine the most suitable path forward. Remember, seeking professional help early on can provide you with a range of debt relief options and increase your chances of achieving a favorable outcome. Take control of your financial future today and explore the options available to you in Manitoba.

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I delayed filing for bankruptcy due to fear and apprehension, but finally mustered the courage to proceed. In retrospect, I'm extremely relieved that I took the leap. My trustee was instrumental throughout the process, making this significant moment in my life quite manageable. I would strongly endorse her services!


Winnipeg, MB