Frequently Asked Questions About Personal Bankruptcy In Ontario
Bankruptcy In Ontario FAQs
If you are currently struggling with debt, there are a number of solutions open to you.
These include debt consolidation, consumer proposals, and bankruptcy.
Especially when you are dealing with debts that you have little or zero-hope of paying back, then bankruptcy might be the best option for you.
Understandably, you will have questions about the process, and that is why we have listed some Ontario Personal Bankruptcy FAQs below.
If you don’t find the answer you need, fear not. Contact us to find out more, as our Licensed Insolvency Trustees are available to guide you further.
What Is Personal Bankruptcy?
Personal bankruptcy is a legal debt-relief solution.
If you are unable to meet your financial commitments and have little hope of paying back your debts within a reasonable time frame, then you are legally allowed to write off your debts with this insolvency option.
Who Can File For Bankruptcy?
If you have become insolvent (unable to pay back the debts you owe), and if you have no other way of paying back the money owed to your creditors, then you should be eligible to file for bankruptcy.
Under the Bankruptcy And Insolvency Act, you need to meet certain requirements when filing for bankruptcy in Canada:
- You must be a Canadian resident;
- You have no other way to pay back the debts due;
- You need to own more than $1000.
If you meet those requirements, then you are legally entitled to file for bankruptcy, although an Ontario Licensed Trustee will still discuss other options with you before going down this route.
What Are The Advantages Of Bankruptcy?
Bankruptcy isn’t your only option, as it might be that a consumer proposal is better for your needs, or there could be another debt solution that is right for you.
A Licensed Trustee will discuss the advantages of each.
When it comes to personal bankruptcy, these are the advantages you can expect:
- You will have legal protection against your creditors;
- You will stop receiving letters demanding payment;
- No legal action will be taken against you;
- In most cases, all of your debts will be eliminated, so you will have a fresh financial start.
What Are The Disadvantages Of Bankruptcy?
In some cases, another debt-relief solution might be more appealing to you as, despite the advantages of bankruptcy, there are disadvantages too.
- You might lose some of your assets in the process;
- If you work within the legal or financial sector, your job might be affected;
- Your credit score will be affected, as bankruptcy will show up on your report for six years;
- Your bankruptcy will show up on the public register.
When speaking to a trustee, you will be directed towards the best option for handling your debts.
If bankruptcy is the right option, the process will be explained to you, and you will be supported at every step.
Despite the disadvantages, you might still consider the option, as for mental as well as financial relief, bankruptcy can be an effective solution.
What Assets Are Exempt When Filing For Personal Bankruptcy In Ontario?
Your trustee will go into specifics with you, but as a general rule, you can expect to keep the following assets when filing for personal bankruptcy in Ontario:
- Most assets that relate to day-to-day life and that allow you to earn a living;
- Up to $5,650 in personal items;
- Up to $11,300 in household furnishings;
- You should be allowed to keep your home, but you might lose equity;
- Pensions and life insurance;
- Your RRSP contributions (except those made in the last year).
How Do I File For Bankruptcy?
Your first step is to contact one of our Licensed Insolvency Trustees.
We will ask you to collect details about your financial situation, such as your income reports and details of your debts, and we will then determine if bankruptcy is right for you.
If you decide that you want to file for bankruptcy, you will be asked to sign documents that will then be sent to your creditors.
At this point, your creditors will communicate with your trustee instead of yourself, and you should refer them to us if they do continue to contact you.
This is only the first part of the process, but to learn more, check out our guide detailing the steps involved in a Canadian bankruptcy.
How Long Does Bankruptcy Last?
If you are filing for bankruptcy for the first time, then you can expect to be discharged from bankruptcy nine months after filing.
Upon your bankruptcy discharge, you will be free of most of your debts (your trustee will discuss those you won’t automatically be exempt from), and you will start the countdown to a better credit score.
To ensure that you are discharged from bankruptcy within this time, you will need to keep up with the duties that are expected of you.
These duties include:
- Monthly income reporting;
- Making any payments that are required of you;
- Attending financial counselling sessions;
- Keeping your trustee informed of your contact information.
What Is A Licensed Insolvency Trustee?
When using the services of Bankruptcy Canada, you will be directed to a Licensed Insolvency Trustee.
This is an individual who has been licensed, trained, and regulated by the federal government to administer bankruptcy and other debt-relief methods.
The trustee will look at your finances, help you make the right decision on what to do to eliminate your debts, and will act as an intermediary between you and your creditors.
For more, check this article on the duties of a Licensed Insolvency Trustee.
If you’re struggling with debt and would like to know more about bankruptcy and the various other forms of debt management open to you, get in touch with us.
Call us at (877) 879-4770 or complete this form to arrange a free consultation with a trustee.
The sooner you take this step, the sooner you will be on your way to a debt-free life.