The Bankruptcy Process in Manitoba

The Bankruptcy Process in Manitoba: A Comprehensive Guide

The pursuit of financial stability is a shared goal. However, sometimes we encounter roadblocks, and our debts may seem insurmountable. In such cases, considering the bankruptcy process in Manitoba might be a viable option. This comprehensive guide aims to shed light on the intricacies of this often misunderstood process.

Understanding Bankruptcy

Bankruptcy is a legal process that can help individuals struggling with debt. In Canada, this process is governed by the Bankruptcy and Insolvency Act. It provides an opportunity to reset your financial situation. However, this decision comes with its own set of advantages and disadvantages that you must consider.

The Benefits of Bankruptcy

Protection from Creditors

Once you file for bankruptcy, an “automatic Stay of Proceedings” is activated. This stay offers immediate relief in the following ways:

Halts collection calls

The relentless calls from collection agencies cease.

Stops wage garnishments

Your earnings will no longer be seized.

Releases frozen bank accounts

Any blocked bank accounts due to your debt situation will be freed.

Prevents legal actions

Any ongoing legal proceedings against you in relation to your debt will be stopped, and new ones cannot be initiated.

Debt Discharge

Generally, filing for bankruptcy eliminates your unsecured debts. However, certain obligations like alimony, child support, student loans less than 7 years old, court fines and penalties, and debts due to fraud or misrepresentation cannot be discharged.

Fresh Start

The bankruptcy process in Manitoba allows you to start anew, free from the shackles of past unsecured debts. This fresh start paves the way to devise a new financial plan that suits your needs rather than being driven by the urgency of collections.

The Drawbacks of Bankruptcy

Bankruptcy, while providing relief from unsecured debts, comes with its own challenges. The most significant downside is the negative impact on your credit score. This adverse effect can last for six years after your discharge, making future borrowing difficult.

Navigating the Bankruptcy Process in Manitoba

Once you’ve decided to initiate the bankruptcy process, follow these steps:

Step 1: Connect with a Licensed Insolvency Trustee (LIT)

To file for bankruptcy, you need a Licensed Insolvency Trustee. They are the only professionals authorized by the Canadian Federal Government to help you file for bankruptcy. They administer your bankruptcy, provide financial counselling, liaise with your creditors, and hold any payments in trust for your creditors’ benefit.

Find a Licensed Insolvency Trustee.

Step 2: Consultation With Your LIT

Your LIT isn’t just there to help with bankruptcy; they can guide you through all debt relief options. During your free initial consultation, your financial situation will be reviewed, and all available debt relief options will be discussed.

Step 3: Filing for Bankruptcy

Your Licensed Insolvency Trustee will collect necessary information from you, such as your personal details, creditor list, and asset list. They will prepare the paperwork, review it with you for accuracy, and ensure you understand the process. Once you sign, your bankruptcy begins, and your trustee will notify your creditors.

Post-Bankruptcy Process

After filing, you must fulfill certain obligations as per the Bankruptcy and Insolvency Act. Your LIT will provide a detailed list of these duties, including:

 

  • Providing a monthly income statement to your Trustee;
  • Attending two mandatory credit counselling sessions;
  • Keeping your Trustee updated on your contact information;
  • Providing tax information for tax return filing.

 

You will also be required to make a monthly payment to your Trustee. The amount varies based on your ability to pay. If you have excess income (over the guideline amount), you must pay 50% of it to the Trustee for your creditors.

Your bankruptcy is typically discharged in 9 months if all duties have been completed and there’s no excess income. However, excess income extends the discharge date to 21 months.

Seeking Professional Support

Understanding and navigating the bankruptcy process in Manitoba can be complex. Therefore, seeking professional help from a Licensed Insolvency Trustee can ease this process. If you’re contemplating bankruptcy, remember that the sooner you reach out for help, the more debt relief options you’ll have.

Contact a Licensed Insolvency Trustee.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.