Another strategy is for the bankrupt to “buy back” the assets from the trustee. Say you have $2,000.00 in RESPs.
You can pay this over the term of the bankruptcy. If your required payments (See the Bankruptcy Calculator) indicate you have to pay the minimum of $1,800.00, you will not have to pay this since the trustee fees will be taken from the $2,000.00 you are paying for the RESPs.
Most people going into bankruptcy keep all their assets.
Your main duties are completing your two counselling sessions and filing monthly budgets and making the required payments.
The form is retained by you so in subsequent months you resend it with required changes.
Impact on your credit score.
When bankruptcy is filed the Office of the Superintendent of bankruptcy notifies the credit bureaus. Your file will be marked R9, which is the worst score. This may not be as bad as it sounds because the vast majority of bankrupts already have a very bad credit rating.
When you file bankruptcy you are actually on the road to a better credit rating because when you are discharged (usually in nine months) you will have no debt. This makes you a better credit risk.
As soon as you are discharged you can immediately take steps to rebuild your credit rating so that in two years you can have a very good credit rating. These are the steps to building a good credit rating:
Have a copy, at hand, of your discharge certificate;
Check your credit report and correct all errors by pointing them out to the credit bureaus;
Get a secured credit card such as from Peoples Trust. Peoples Trust will report the payments you make each month which helps rebuild your credit as you make regular payments over time;
After a few months borrow for RRSPs or to purchase a car. Always, always pay your bills on time;
In a few more months you will see your credit score rise;
Don’t be concerned about your credit score being hurt by your checking your own credit report. Checking your own credit report does not lower your credit score.