The short answer is no, it is not difficult to file bankruptcy in Canada.
While it is not difficult to claim bankruptcy, you should be aware of some things before you consider going bankrupt as a way to manage your debt.
- Bankruptcy is a legal way for honest but unfortunate debtors to relieve themselves from overwhelming debt so they can have a fresh financial start due to unforeseen circumstances.
- Bankruptcy law is outlined by the Federal Government of Canada by the Bankruptcy and Insolvency Act (BIA). The BIA, or the “Act”, governes the laws of bankruptcy in all Canadian Provinces and Territories.
- Only a Licensed Insolvency Trustee (a “LIT”) is licensed to administer bankruptcies.
- In order to file for bankruptcy, you must be an “insolvent person” which means:
Your unsecured debts are greater than $1,000
You have insufficient assets to cover your debts or
You are unable to pay your bills as they become due.
In order to start the process for filing bankruptcy, you must meet with a Licensed Insolvency Trustee.
We have trustee offices all across Canada, so regardless of where you live, you can book an appointment with one of our licensed trustees.
For individuals living in remote areas, it is possible to file bankruptcy over the phone.
During your first appointment with the Trustee, you should bring information about your debts and finances.
This information will help your Trustee to assess your personal financial situation so they can advise you on all of the options to overcome your debt problem.
When the trustee has a full understanding of your debt problem, they might be able to suggest potential alternatives to bankruptcy that could work for you.
Bankruptcy alternatives that could be available to you inclue using debt consolidation, referring you to a Non-profit agency that provides the Orderly Repayment of Debt Programs, making an informal debt settlement with your creditors, or a Consumer Proposal.
If you and the Trustee determine that personal bankruptcy is right for you, the Trustee will be able to file your Assignment in Bankruptcy for you.
If you decide that going bankruptcy works for you, you will be given an application form by your Trustee.
Once you return this form to your Trustee, they will be able to fill out the documentations you must sign.
The Trustee will also ask you to affirm a “Statement of Affairs” which lists your personal information, assets, a list of your creditors, a note about your financial difficulties, and your income and expense statements.
Once the Trustee has all of your information the Trustee will send your documents to the Official Receiver, an agent of the Superintendent of Bankruptcy.
Once your bankruptcy petition has been filed, all legal actions against you will cease.
This means your creditors cannot sue you, collection calls will stop, and wage garnishments will end.
During your bankruptcy you will be required to complete certain duties and provide your Trustee with certain information, such as your monthly income and expenses.
Bankruptcy can be overwhelming, but it is much less stressful than being trapped in a cycle of debt.
Your Trustee will work with you throughout the entire bankruptcy process.
In order to receive your bankruptcy discharge you must complete all of your duties in a timely manner.
If you do not receive your bankruptcy discharge because you do not complete your duties, your creditors will be able to take legal action against you and it will be as if you never filed for bankruptcy.
However, once you do receive your bankruptcy discharge, all of your unseucred debts will be forgiven, with a few exceptions that your Trustee will explain before you decide to make the bankruptcy assignment.