How to File For Bankruptcy With No Money

In the face of overwhelming debt and dwindling resources, you may feel cornered and desperate. But despite your financial hardship, there are options available to help you navigate this challenging time. This article offers a comprehensive guide on how to file for bankruptcy with no money in Canada and explores viable alternatives to consider.

Understanding Bankruptcy

Declaring bankruptcy is a legal process designed to provide relief to individuals who can no longer meet their financial obligations. However, it should be considered a last resort due to its long-term effects on your credit.

Bankruptcy: The Basics

When you declare bankruptcy, your assets are assigned to a Licensed Insolvency Trustee, who liquidates them to repay your creditors. You’ll be absolved of most of your unsecured debts, but certain debts like child support, alimony, student loans (if it’s less than seven years since you finished school), and court fines are exempted.

Costs of Bankruptcy

Ironically, even though bankruptcy is a solution for those with no money, it still costs money to file for bankruptcy. The costs include administrative fees, court fees, and fees for mandatory financial counselling sessions.

Assessing Your Financial Situation

Before diving into the bankruptcy process, it’s crucial to have a thorough understanding of your financial standing.

Evaluate Your Debt

The first step is to evaluate the type and amount of debt you have. Is it consumer debt, tax debt, or student loans? Knowing the nature of your debt is crucial as different debts are treated differently during bankruptcy.

Determine Your Assets

Next, make an inventory of your assets, including property, vehicles, investments, and personal belongings. In bankruptcy, a significant portion of your assets may be used to repay your creditors.

Calculate Your Income

Finally, calculate your income. Include all forms of income, such as employment income, pensions, and government benefits. Your income determines how much you’ll need to pay during bankruptcy.

The Bankruptcy Process

If you’ve decided that bankruptcy is the right choice, here’s a step-by-step guide on how to file for bankruptcy with no money.

Consult with a Licensed Insolvency Trustee

Start by consulting a Licensed Insolvency Trustee (LIT). They’ll review your financial situation and guide you through the bankruptcy process or suggest alternatives if applicable.

Complete the Necessary Paperwork

Next, the LIT will help you complete the necessary paperwork. This includes a Statement of Affairs, which details your debts, assets, income, and expenses.

Attend Credit Counselling Sessions

As part of your bankruptcy filing, you’ll need to attend two credit counselling sessions. These sessions aim to help you manage your finances better in the future.

The Aftermath of Bankruptcy

Bankruptcy can provide debt relief, but it also has long-lasting effects.

Impact on Credit

A bankruptcy stays on your credit report for six years after your discharge, making it difficult to get new credit during that time.

Loss of Assets

You might lose some of your assets in a bankruptcy as they’re used to repay your creditors.

Surplus Income Payments

If your income exceeds a certain threshold, you’ll need to make surplus income payments, which increase the cost of your bankruptcy.

Alternatives to Bankruptcy

Before deciding to declare bankruptcy, consider exploring alternatives.

Debt Consolidation

Debt consolidation involves taking out a new, single loan to pay off all your existing debts. This can make your debt more manageable.

Consumer Proposal

A consumer proposal is a legal agreement between you and your creditors, facilitated by a LIT. You agree to pay a portion of your debt over a specified period.

Debt Management Plan

A Debt Management Plan is an informal agreement between you and your creditors where you agree to repay your debts in full over time, often with reduced interest rates.


Filing for bankruptcy with no money is a complex process with long-term consequences. It’s essential to understand the process thoroughly and consider all alternatives before making a decision. Remember, there are professionals available to help guide you through this challenging time. With careful planning and the right support, you can navigate your financial hardship and work towards a more secure future.

Find Your Personal Debt Relief Solution

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