What Happens When You Declare Bankruptcy in Ontario?

Declaring Bankruptcy in Ontario: Your Go-To Guide

Proclaiming bankruptcy in Ontario can be a challenging journey. For those unfamiliar with the process, the road ahead can seem daunting and overwhelming. This guide aims to demystify what happens when you declare bankruptcy in Ontario. By breaking down the process into manageable steps, we hope to provide you with the knowledge and understanding required to navigate this journey successfully.

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

The journey to bankruptcy begins with a risk-free, obligation-free consultation with a Licensed Insolvency Trustee (LIT). An LIT is a federally regulated professional specializing in Canadian insolvency procedures. They are experts in debt consultation and adhere to a strict code of ethics.

During the consultation, the LIT will listen to your financial situation and assess your circumstances. They will explain all your available debt relief options and help you understand the potential implications of each option. Bankruptcy is one of the many paths available, and the LIT will discuss this with you in detail if it seems suitable for your situation.

Key Points to Remember About Your First Consultation

  • Prepare a comprehensive list of all your debts and their respective amounts.
  • Jot down any questions or concerns you might have.
  • Be ready to discuss your monthly income and expenses.

Step 2: Preparing the Bankruptcy Documents

If you decide that bankruptcy is the appropriate option for you, the next step involves preparing the required documents. It’s important to note that only a Licensed Insolvency Trustee can administer a bankruptcy filing in Ontario.

To prepare the documents, you will need to provide detailed information about your financial situation. Be prepared to give your personal information, including your name, address, and birthdate, as well as a comprehensive list of your creditors and assets.

Step 3: Filing the Bankruptcy Documents

Once the documents are prepared and signed, the LIT will file them with the government using a specialized electronic filing system. When the documents are uploaded, the trustee will receive a certificate of appointment, marking the start of the bankruptcy process.

The filing also triggers a stay of proceedings, which prohibits your creditors from taking any further action to collect the debt. This includes charging interest, sending collection agents, garnishing wages, or taking other legal actions.

Step 4: Fulfilling Your Obligations During Bankruptcy

Once you have declared bankruptcy, you will need to fulfill specific duties and obligations. These include surrendering any non-exempt assets, handing over credit cards for cancellation, providing monthly income and expense statements, and attending at least two credit counseling sessions.

Step 5: Getting Discharged From Bankruptcy

After fulfilling your obligations, you will be officially discharged from bankruptcy. This legal process releases you from your debts, marking the end of your bankruptcy journey.


Declaring bankruptcy in Ontario is a complex process, but understanding what happens when you declare bankruptcy can make the journey less daunting. If you find yourself considering bankruptcy, remember to consult with a Licensed Insolvency Trustee. This professional can guide you through the process, ensuring that you are well-informed and prepared to make the best decision for your financial future.

Frequently Asked Questions

How does the trustee get paid?

  • The trustee’s payment comes from the funds collected during the bankruptcy period, which form the bankruptcy estate.

Can I review the documents before meeting to sign them?

  • You can request to review the documents in advance, but the trustee will also discuss each document with you in detail at the meeting.

How much do I have to pay if I have no assets and little to no income?

  • If it’s your first time declaring bankruptcy and you have low or no income, you will pay $200 per month for nine months.

What if I do not make the necessary payments or fulfill the obligations?

  • You cannot be discharged from bankruptcy and released from your debts until you have completed all your duties. If you’re struggling, contact your trustee right away to discuss potential solutions.

Bankruptcy is a significant decision that can deeply impact your financial future. If you’re considering this path, it’s crucial to understand what happens when you declare bankruptcy in Ontario. By understanding the process and your options, you can make an informed decision that best suits your financial needs and goals.

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