Low Cost Bankruptcy Help & Your Income Level

Financial struggles can be overwhelming, and sometimes, the only way out seems to be declaring bankruptcy. However, the cost of bankruptcy can be a deterrent. This guide aims to help you understand low-cost bankruptcy options and how your income level might impact them.

Understanding Bankruptcy

Bankruptcy is a legal process that helps individuals who are unable to meet their financial obligations get a fresh start. It involves liquidating assets to pay off debts or creating a repayment plan.

Note: Bankruptcy should be considered a last resort after exploring other debt management solutions.

Qualifying for Bankruptcy

To be eligible for bankruptcy, you need to reside or do business in Canada, and your liabilities should exceed your total assets by at least $1,000. You should be incapable of meeting your financial obligations as they become due, or have stopped making payments in the normal course of business.

Duration of Bankruptcy

The length of bankruptcy depends on several factors, including whether it’s your first bankruptcy and your monthly net income. Generally, a first-time bankruptcy without surplus income lasts for nine months plus a day from the start of the bankruptcy.

Bankruptcy and Co-Signers

Bankruptcy can impact your co-signers. Creditors have the right to collect debts from co-signers if the primary borrower declares bankruptcy.

Handling Creditor Harassment

Once you file for bankruptcy, a stay of proceedings is put in place, stopping all legal and collection proceedings, including harassment. Any calls received after filing should be referred to your trustee.

Cost of Bankruptcy

The cost of filing for bankruptcy depends on various factors, including the type of assignment and your income level. The cost is usually broken down into manageable monthly payments.

Dealing with Student Loan Debts

Bankruptcy can help with student loan debts if you’ve been out of school for seven years or more. If you’ve been out of school for between five and seven years and are experiencing financial hardship, you may apply to the court to have your student loans discharged along with your other debts.

Impact on Credit Rating

Bankruptcy stays on your public record for up to seven years, although most credit bureaus remove reference to a first-time bankruptcy after only six years. The credit rating associated with bankruptcy is R9.

Re-establishing Credit After Bankruptcy

The ability to reestablish credit after bankruptcy depends on various factors, including your employment status, income, and what you’ve done since filing for bankruptcy.

Bankruptcy and Personal Assets

In bankruptcy, you usually handle your money, continue to receive your paycheck, and pay your monthly bills. Most people who want to keep their homes can do so, provided they keep their mortgage payments current.

Consequences for Spouses

Technically, your bankruptcy does not affect your spouse or common-law partner unless they co-signed, guaranteed, or jointly applied for the credit.

Alternatives to Bankruptcy

Bankruptcy is not the only solution to financial troubles. Other options could include negotiation with creditors, debt consolidation, or filing a consumer proposal.


Bankruptcy can be a daunting process, but understanding the intricacies can help you make an informed decision. Remember, it’s crucial to seek professional advice to explore all your options before deciding to file for bankruptcy.

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