Bankruptcy Ontario

Ontario Bankruptcies:

Filing Personal Bankruptcy in Ontario

If you’re facing overwhelming debt in Ontario, filing for bankruptcy can provide a legal process to eliminate or reduce your financial burdens. In this comprehensive guide, we will walk you through the steps of filing for bankruptcy in Ontario, address common myths, and provide insights into the impact on assets, credit rating, and spousal considerations. As Licensed Insolvency Trustees, we have helped numerous individuals and businesses navigate the process, providing them with a fresh start.


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Understanding Bankruptcy in Ontario

Bankruptcy in Ontario is a legal process governed by the Bankruptcy and Insolvency Act. It offers individuals and businesses a way to eliminate or reduce their debts and obtain relief from creditors. To file for bankruptcy in Ontario, you must work with a Licensed Insolvency Trustee (LIT), who will guide you through the process.

2. Step 1: Contacting a Licensed Insolvency Trustee (LIT)

The first step in filing for bankruptcy is to contact a Licensed Insolvency Trustee. LITs are qualified professionals authorized to administer bankruptcies and consumer proposals. They will assess your financial situation, explore alternatives to bankruptcy, and guide you towards the best solution for your specific circumstances.

3. Step 2: Gathering Creditor, Asset, and Income Information

Once you have chosen to file for bankruptcy, you need to gather all relevant information about your creditors, assets, and income. This includes documents such as letters from debt collectors, credit card statements, property deeds, pay stubs, and bank statements. Providing accurate and comprehensive information will help the LIT assess your financial situation and determine the best course of action.

4. Step 3: Signing the Documents and Affidavit

After meeting with the LIT and reviewing your financial information, you will need to sign the necessary bankruptcy documents and swear an affidavit. These documents include a statement of affairs, which details your income, assets, and debts. The LIT will explain the significance of each document and ensure that you fully understand the implications of filing for bankruptcy.

5. Step 4: Filing the Paperwork with the Office of the Superintendent of Bankruptcy

Once you have signed the documents, the LIT will file them with the Office of the Superintendent of Bankruptcy of Canada. This step officially initiates your bankruptcy process. From this point forward, a stay of proceedings will be in place, protecting you from creditor harassment and collection actions.

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Making Payments and Attending Mandatory Credit Counselling Sessions

During your bankruptcy period, you will have certain responsibilities. These include providing the LIT with updated financial information, attending credit counselling sessions, and making required payments. The length of your bankruptcy will depend on various factors, such as whether it is your first bankruptcy and whether you have surplus income.

7. Debunking Common Myths about Bankruptcy in Ontario

There are several misconceptions about bankruptcy that can create fear and uncertainty. Let’s address some of the common myths and provide accurate information:

Myth 1: Bankruptcy is the only option

While bankruptcy is a viable solution for debt relief, it is not the only option. LITs can help explore alternatives such as debt consolidation, credit counselling, and consumer proposals. These alternatives may be more suitable depending on your financial situation.

Myth 2: Bankruptcy will solve all your problems

Filing for bankruptcy eliminates most debts and provides a fresh start. However, it is essential to address the underlying financial habits and make necessary changes to avoid falling back into debt. Financial counselling provided during bankruptcy can equip you with the tools to manage your finances more effectively.

Myth 3: You will lose everything

Bankruptcy does not mean losing all your assets. Ontario bankruptcy law allows exemptions for certain assets, including personal belongings, household furniture, tools of the trade, and a motor vehicle up to a certain value. The LIT will work with you to protect as many assets as possible while meeting your obligations.

Myth 4: Filing for bankruptcy is free

Filing for bankruptcy involves costs determined by federal regulations. The fees are based on factors such as household income and equity in non-exempt assets. Additionally, if you have surplus income, you may be required to make payments to your bankruptcy estate.

8. Protecting Assets during Bankruptcy

It is natural to be concerned about losing assets when filing for bankruptcy. However, Ontario bankruptcy law provides exemptions to protect certain assets from seizure by the LIT. These exemptions cover items such as employer pension plans, RRSPs, personal effects, household furniture, and tools of the trade. Working with an experienced LIT can help you understand the specific exemptions applicable to your situation.

9. The Impact on Credit Rating

Filing for bankruptcy will have a significant impact on your credit rating. It will be noted on your credit report for a certain period, typically six years after discharge for a first-time bankruptcy. Second-time bankruptcies may remain on the credit report for 14 years. However, with proactive efforts to rebuild credit, such as obtaining secured credit cards and making timely payments, it is possible to improve your credit rating over time.

10. Considerations for Spouses in Bankruptcy

Bankruptcy filed by one spouse does not automatically affect the other spouse’s credit rating. However, there are unique circumstances to consider, such as joint debts or shared assets. It is crucial to consult with an LIT to fully understand how bankruptcy may impact both you and your spouse.

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Filing for bankruptcy in Ontario is a significant decision, but it can provide relief from overwhelming debt and pave the way for a fresh financial start. By following the steps outlined in this guide and working with a Licensed Insolvency Trustee, you can navigate the process with confidence and take control of your financial future. Remember, bankruptcy is not the end, but rather an opportunity to rebuild and establish healthier financial habits.

If you are considering bankruptcy in Ontario, we are here to help. Contact our team of experienced Licensed Insolvency Trustees for a free consultation and personalized guidance through the process. Don’t let debt hold you back from a brighter future.

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I took advantage of a complimentary consultation with a Trustee from BankruptcyCanada. He provided valuable guidance that allowed me to regain my financial footing. His explanations were clear, simple, and free of judgment, which made our conversation very comfortable. Despite not being a paying client, he still provided exceptional advice. His help was invaluable and I'm truly thankful for it. If anyone is struggling with debt issues, I wholeheartedly recommend his services.


Mississauga, ON