Filing For Bankruptcy In Canada

Debt can be a huge source of stress for many Canadian households.

If you find yourself with a feeling of dread in the pit of your stomach when looking through your mail or hearing the phone ring, then you know what this feels like.

Perhaps you’ve tried to create a budget, downsized, avoided credit, and used other methods of attempting to bring your debts down.

In these cases, it can feel like nothing you’re doing is helping and that there’s no way out, but for many, bankruptcy is a viable and sensible option.

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Filing For Bankruptcy In Canada – A Positive Step

Filing for bankruptcy can seem extremely daunting, but sometimes, it’s the only sensible option for those who need to eliminate their debts.

Bankruptcy should really be viewed as a positive step to eliminating existing debts and getting a fresh start financially – providing it’s the right move for you to take at this time.

Bankruptcy is regulated by the Bankruptcy and Insolvency Act – the purpose of this is to permit the debtor to obtain a bankruptcy discharge from their debts, but is subject to certain conditions.

You must work with a licensed insolvency trustee to go bankrupt in Canada.

This trustee will act as a middle man to ensure that both the debtors and creditors are treated fairly during the process.

There are numerous reasons to file for bankruptcy, but you should look into other options, too.

Start by doing the following:

Understand Your Debt

The first step is to understand that you are having financial problems, and to acknowledge that you can’t work through these on your own.

Each and every situation is different, but there are a few indicators of financial difficulty that mean you may need to take action sooner rather than later:


  • You have maxed out numerous credit cards;
  • You are not making the required payments on your mortgage or your loans;
  • You’re paying your bills using credit cards and other types of loans;
  • Your creditors have passed your account to collection agencies and you are receiving endless calls;
  • You have received a notice of legal action against you so that the money you are owed can be collected;
  • If the above statements apply to your situation and you want to move forward, then it could be time to look into bankruptcy. This will stop collection actions, eliminate unsecured debts, and stop wage garnishments. You will also receive credit counseling which is designed to assist debt recovery;
  • Once you have applied for bankruptcy, unsecured creditors will not be able to take action towards retrieving their debts. You will no longer receive visits or calls. This can be a huge weight off the shoulders for those who feel like they are constantly thinking about their debts.


How Do You File For Bankruptcy In Canada?

If you would like to file for bankruptcy in Canada, you must start by getting a free debt assessment.

If you are suitable for bankruptcy you will then be required to sign the paperwork to declare it truthful and the trustee will file them and start your creditor protection.

You must then complete your bankruptcy duties and you will obtain your certificate of discharge to eliminate your debts.

Selecting Your Trustee

Meeting with a bankruptcy trustee is one of the first steps to take if you’re unsure whether this is for you but you feel that it might be.

If your debts are overwhelming you taking this first step will help to give you peace of mind and be a positive step in the right direction.

When you have met with your trustee they will provide information about consumer proposals, as well as the process for filing bankruptcy and your other debt relief options.

A good trustee will always inform you of other options so you understand every choice you have.

Your trustee will also ensure that during the process your rights are respected.

Insolvency trustees are licensed by the Canadian Government to help consumers get out of debt.

You must work with one of these trustees by law when filing for bankruptcy in Canada.

You are free to select your own trustee, however, so bear the following in mind:


  • Ensure your trustee is easy to access or local;
  • Ensure you feel comfortable with the trustee;
  • Ask the trustee questions about your situation and make sure you are on the same page. Question anything you don’t understand;
  • Confirm that the trustee is licensed by the Superintendent of Bankruptcy.


Working With Bankruptcy Canada

If you think filing for bankruptcy is right for you and you choose to contact Bankruptcy Canada, your rights will be respected and the process will begin.

Your situation will be assessed, you will have debt relief options explained to you, and you will be informed on the alternatives to bankruptcy.

You will then complete several bankruptcy forms and sign them if you wish to go ahead with the process.

The forms are as follows:


  • Assignment – this form states that you are handing over all of your property to the bankruptcy trustee for the benefit of your creditors.
  • Statement of Affairs – this is a statement regarding your assets, liabilities, income, and expenses.


On top of filling out these forms you will also be expected to answer questions regarding your family, employment, and disposition of assets.

Remember, understanding the legal documents that are a part of the bankruptcy file is key.

The trustee prepares them, but they are classed as your statements so you must understand what is written as you are responsible for the accuracy of them.

If they are inaccurate then it will be your fault.

Bear in mind that you will only be declared bankrupt once all of the paperwork is filed with the Official Receiver.

At this point, the bankruptcy will not be able to reverse without a court order.

Joint Bankruptcy

You may also be able to file for joint bankruptcy.

This is suitable for those involved in a close financial relationship who wish to have their debts dealt with as one file.

If your debts are substantially the same and the bankruptcy trustee beliefs it is in both the best interests of the debtors and the creditors, you may be granted joint bankruptcy.

This is available to debtors if their debts are substantially the same and the bankruptcy trustee believes it is in the best interest of the debtors and creditors.

After you file for bankruptcy the proceedings will begin immediately and you will stop making payments to your unsecured creditors and make bankruptcy payments instead.

Bankruptcy Duties

When you file for bankruptcy you will be required to take care of your Bankruptcy Duties.

The trustee will inform you of these duties, but they will largely involve making bankruptcy payments, providing accurate and up to date information about your monthly budget, and attending two credit counseling sessions.

You are also responsible for keeping the trustee notified of any material changes to your situation.

Meeting of Creditors

A meeting of creditors is not necessary but may be required in certain instances.

This usually happens in 1 bankruptcy out of 1000 and is mainly only if you have significant tax debt.

You must attend if one is called, it is not optional.

In some cases you may also need to attend the Official Receiver’s office and answer questions regarding your financial affairs while under oath.

Examination With The Official Receiver

If you are required to meet with the Official Receiver during the process, you will get a notice to appear before them to be questioned under oath.

They will ask you questions about the cause of your bankruptcy, your conduct, disposition of property, and other questions about the nature of your debts.

This happens with around 1 in every 30 cases and the people are often selected at random.

When Is A Bankrupt Discharged?

An automatic bankruptcy discharge will be issued for a first time bankruptee nine months after they became bankrupt – unless the trustee recommends a discharge with conditions, or it is opposed by a creditor, the trustee, or Superintendent of Bankruptcy.

If you have a surplus income of more than $200 a month, your bankruptcy will be extended to 21 months in the case of a first bankruptcy.

Get In Touch With Bankruptcy Canada Today

If you need help understanding whether filing for bankruptcy in Canada is for you, don’t hesitate to get in touch with Bankruptcy Canada: Canada’s bankruptcy professionals.

We have been active for over 20 years and we have helped Canadians from all walks of life start over.

We can help you with your debt and enable you to get that fresh start.

Canadian Bankruptcies

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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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