Claiming Personal Bankruptcy in Ontario: A Comprehensive Guide
Personal bankruptcy in Ontario is a legal process that allows individuals to eliminate their debts and get a fresh start. Declaring bankruptcy can be a daunting task, but with the right guidance, the process can be less stressful. This article will provide an in-depth guide on how to declare personal bankruptcy in Ontario.
Understanding Personal Bankruptcy
In Ontario, bankruptcy is a legal proceeding that can only be initiated through a federally Licensed Insolvency Trustee (LIT). Upon filing for bankruptcy, you get immediate protection from your creditors, halt wage garnishments and other legal actions, and start the process of eliminating your debts.
If contemplating bankruptcy, your first step should be to consult a trustee. Trustees help you explore all your debt relief options, including ways to avoid bankruptcy. You can find a local trustee by clicking here.
Filing for Bankruptcy
Should you opt for bankruptcy, your trustee will handle all aspects of your case. Once you sign the necessary paperwork, the trustee will electronically file the documents with the Office of the Superintendent of Bankruptcy, a division of the federal government that oversees all bankruptcies in Canada. Your bankruptcy commences immediately after the documents are filed.
Within five days of filing, all your creditors are notified of your bankruptcy, and they are directed to file their claims with the trustee.
Duties During Bankruptcy
During the bankruptcy period, you are required to fulfill certain duties:
- Provide your tax information to the trustee to file your outstanding tax returns, including the current year.
- Submit copies of your pay stubs and proof of other income each month.
- Attend two credit counselling sessions to help with budgeting and get a fresh start post-bankruptcy.
- Contribute the required amount (including surplus income payments) to your bankruptcy estate.
- Surrender any non-exempt assets.
- Complete any other duties requested by the trustee.
Bankruptcy Discharge
At the end of the bankruptcy period, you receive a discharge from bankruptcy. This discharge frees you from the legal obligation to repay the debts covered by your bankruptcy.
The duration of your bankruptcy depends on whether it’s your first bankruptcy, whether you were required to make surplus income payments, and whether or not you have fulfilled all your duties.
If it’s your first bankruptcy and you have no surplus income, you could be discharged within nine months. However, bankruptcy can impact your ability to get credit in the future significantly.
Conclusion
Declaring bankruptcy is a significant decision that should not be taken lightly. We recommend that you consult with a trustee to understand the implications fully. Trustees in Ontario offer a free initial consultation. To schedule one and get your questions on declaring bankruptcy in Ontario answered, please contact us today.
Remember, financial problems seldom resolve themselves. The sooner you take action, the sooner you can start anew.
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