In order to file for bankruptcy in Canada you need to use the services of a Licensed Insolvency Trustee (LIT) who is the only debt relief expert who can help you with filing bankruptcy and is the only professional who can answer the question “Where to File For Bankruptcy.”
If you are unable to pay the debts you owe bankruptcy is a legal process that will help you get out of debt and give you a fresh financial start.
Bankruptcy will provide you with instant relief and protection from your creditors.
Finding a Licensed Insolvency Trustee
As stated earlier you can only file bankruptcy with the help of a Licensed Insolvency Trustee (Bankruptcy Trustee) so the first step to take when considering bankruptcy is to meet with a Trustee who is licensed by the Government.
A LIT is licensed by the OSB (Office of the Superintendent of Bankruptcy) to administer to the bankruptcy process.
When you meet with the Licensed Insolvency Trustee / Bankruptcy Trustee he or she will help you examine your money situation and help you explore any possible alternative to bankruptcy.
What Happens if you File for Bankruptcy
If you decide to go ahead with filing bankruptcy you will have to return to the trustee’s office so you can sign the necessary paperwork in order to become bankrupt.
Once you have signed the paperwork your LIT will send these documents to the OSB, which will be the official start of your bankruptcy.
Once you are declared bankrupt you will no longer deal with your creditors, your wage garnishments will stop and your creditors will not be able to contact you or attempt any collections.
Your LIT will be responsible for notifying your creditors of your bankruptcy.
When you have been declared officially bankrupt your trustee will sell any of your non-exempt assets and will hold any money raised from the sale of your property in a trust and the funds will be distributed to your creditors.
Your bankruptcy trustee will help guide you through the entire bankruptcy process and you will go to the trustee’s office for two financial counselling meetings.
You will learn how to manage your finances and understand the causes of your bankruptcy.
These financial counselling meetings will occur at the trustee’s office. You must attend these meetings to be eligible for your automatic bankruptcy discharge.
Surplus Income Payments
In addition to the minimum fees necessary to file bankruptcy (administrative fees and fees for your Licensed Insolvency Trustee’s time) you might also be required to make surplus income payments. Surplus income is any amount you earn over a threshold set by the government.
The larger your family the more you are allowed to earn before surplus income payments become required.
If you pass the surplus income threshold the more that you earn the higher your surplus income payments will be.
If your surplus income payments are more than $200 a month, you will have to contribute 50% of that amount to your bankruptcy estate.
Discharge From Bankruptcy
Once you receive your bankruptcy discharge you are released from the legal obligation to repay your debts. This only applies to debts that existed at the date you filed for bankruptcy and were listed on your bankruptcy paperwork.
There are certain exceptions to debts that can be included in bankruptcy (secured debts, fines from the court, alimony and child support payments, student loans that are less than 7 years old, debts arising from fraud) and bankruptcy will not wipe out debts that you acquired during your bankruptcy (you must disclose you are an undischarged bankrupt if you want to borrow more than $1,000)
Getting your discharge is automatic in almost all cases but the timing will depend on whether you are filing a first or second bankruptcy, and whether you have surplus income payments to make.
Where to file bankruptcy is only at a Licensed Insolvency Trustee’s office.
If you have any questions about this or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our bankruptcy trustee, who are in every province and territory in Canada.