How do I Declare Bankruptcy When I'm a Snowbird?

Many Canadians like to spend large tracts of the year overseas, especially in southern states like California and Florida.

Knowing how to navigate bankruptcy when you live in multiple locations, however, isn’t always clear.

You wonder how the laws and rules apply, and whether you have to return to Canada to file. 

If you’re a snowbird (somebody who spends a lot of time abroad over the winter months) and considering bankruptcy, this post is for you.

You’ll learn how to declare bankruptcy when you’re out of the country, and your obligations under the law. 

Get Your Financial Situation Assessed By A Trustee

A licensed insolvency trustee is a professional who has the legal authority to manage your bankruptcy case and deal with creditors on your behalf.

Before you take any action, it is best to get them to assess your current financial position.

After a thorough investigation of your debts, assets, and income, they will tell you whether they think bankruptcy is the best decision. 

Sometimes, declaring bankruptcy is just one of several options open to snowbirds.

Even if you cannot meet your debt obligations as they currently stand, there are alternative legal mechanisms to bring down the amount you owe.

A licensed insolvency trustee will tell you about these and whether they are a viable approach, given your current financial situation. 

Typically, the assessment will look at your monthly income and expenses to get a sense of your net cash flow.

People in unsustainable debt often find that their costs exceed their income, even if they cut their spending to the bone.

In cases like this, bankruptcy is a viable option. 

Under Canadian law, licensed insolvency trustees must carry out assessments in-person if the person filing is currently living in Canada.

However, if you live in a remote location, you can sometimes avoid travel expenses by having this conversation over the phone.

The licensed trustee will contact the Office of the Superintendent of Bankruptcy (OSB), asking permission to carry out the assessment over the telephone.

If the OSB grants it, you can stay in their current location and don’t have to worry about additional expenses. 

File For Bankruptcy Remotely

After the initial assessment, the remainder of the bankruptcy process is relatively procedural.

The licensed insolvency trustee takes control of all communication with your creditors on your behalf and seeks permission to declare you bankrupt from the court. 

After that, much of the subsequent correspondence between you and your trustee can happen via mail or email.

Over the following months, you may have to send them information about your monthly income and tax return in the year you declare bankruptcy.

But so long as you can transfer the necessary paperwork, there is no practical reason why you need to meet in-person. 

Complete Duties To Discharge You From Bankruptcy While Abroad

When you file for bankruptcy, the court may attach some stipulations to complete before you can discharge your bankruptcy.

In traditional bankruptcies, people filing typically complete a series of debt counselling sessions.

Here, a licensed practitioner talks to them about how they can better manage their money, attempting to give them tools that will avoid a similar situation in the future.

If you are a snowbird, though, you may not want to travel back to Canada to get debt counselling sessions.

Ironically, doing this may worsen your financial position.

Fortunately, licensed insolvency trustees can ask the OSB for permission to hold debt counselling sessions over the phone.

You may also be able to delay your debt counselling sessions until you return to Canada, depending on when you file. 

Speak With A Canadian Insolvency Specialist

Many snowbirds spend the vast bulk of the winter months in southern US destinations.

But even if you spend a considerable chunk of the year in those locations, you should only file for bankruptcy using a Canadian licensed insolvency trustee.

Canadian law regarding this matter is very different from US law.

If you are a Canadian citizen, the vast majority of your debts will be denominated in Canadian dollars and owed to Canadian lenders.

Therefore, you should contact a trustee licensed by the OSB, right here in your home country, instead of seeking alternatives abroad.

Only Canadian practitioners have the legal authority to help you file for bankruptcy in Canada. 

Should You Declare Bankruptcy As A Snowbird?

Licensed insolvency trustees view bankruptcy as a last resort.

It is what you must do if there is no other way to pay off your debts and get back on the road to financial health and wellbeing. 

Even if you’re a snowbird, you may have other options besides going bankrupt, that you can use to get out of your current financial dilemma.

Bankruptcy is not a wholly benign process.

While it eliminates your qualifying debts and stops creditors from chasing you, it also leaves a mark on your credit records and puts restrictions on your economic life.

Accessing credit will be much more difficult for a time after you file. 

Snowbirds, however, have other options open to them.

For instance, a consumer proposal is a tool that they can use to negotiate the amount of money you owe to creditors, cutting your overall bill.

Here you pay off what you can reasonably afford, avoiding the full bankruptcy process and ensuring that creditors get at least some of their money back. 

If you’re worried about losing your assets, you can discuss this with a licensed insolvency trustee.

They can show you how you can protect your primary assets, like your home, in a bankruptcy filing.

And they can give you pointers for what you can do to avoid difficulties in the future. 

Most people don’t deliberately get into debt.

For many, it is just something that happens.

Licensed insolvency trustees understand this unfortunate reality and are there to help you when you need support.

Speak to yours today and get the advice and legal assistance you need to get on the road to financial health. 

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