What is Bankruptcy in Canada?

What is BankruptcyBankruptcy is a legal process governed by the Bankruptcy and Insolvency Act, which is a federal law.

Once your bankruptcy has been filed, the Stay of Proceedings will go into effect, which puts an end to all collection actions by your unsecured creditors.

Collection calls and any other legal action stops and interest stops accruing.

Wage garnishments, in place or contemplated are also stopped.

Canadian bankruptcies laws are intended to protect you and give you a chance for a fresh start without the burden of overwhelming debts.

Our Bankruptcy Calculator will give you the exact cost and how long you will be in bankruptcy.

The insolvency proceedings will give you an automatic discharge at the end of the case (usually 9 months)

Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation

Call 877-879-4770


When you receive your bankruptcy discharge all your eligible debts are erased.

You need to use a government licensed insolvency trustee to go bankrupt.

Trustee fees are regulated by the government so all trustees charge the same amount.

In order to be eligible to declare bankruptcy a person must be insolvent and must live or do business in Canada, or have previously done so as it is possible to file Canadian bankruptcy from abroad.

You must use a licensed insolvency trustee to file the paperwork to go bankrupt and our trustees are licensed by the Office of the Superintendent of Bankruptcy.

Insolvency Explained:

To be insolvent you must:

* Owe $1,000 or more and;
* Be unable to make payments on your debt as the payments become due to be paid.

What is The Process?

The bankruptcy process almost always begins with a voluntarily assignment into bankruptcy although it is possible for someone to be petitioned into bankruptcy by their creditors.

You will work with a Licensed Insolvency Trustee who will administer your bankruptcy, file all necessary paperwork and deal with your creditors on your behalf.

As an officer of the court, the trustee does not work for you or your creditors, although the trustee will ensure that both you and your creditors are treated fairly.

This outline shows the steps involved in a typical straightforward case.

Your trustee will notify your creditors of your bankruptcy, hold the meeting of creditors (if one is requested) and will give you your two required bankruptcy counselling meetings that are part of your bankruptcy duties.

If you have any assets you have to surrender because they are not protected by the exemptions the trustee will hold these assets until they can be sold and then will hold the funds from the sale in trust for distribution to your creditors who have submitted a valid Proof of Claim on debts that you owe to them.

You must finish any of the bankruptcy duties required and make all required payments to your bankruptcy estate in order to receive your bankruptcy discharge.

After you have received your discharge a record of your insolvency will remain on your credit report for up to 7 years although you will be able to rebuild your credit and often, going bankrupt is the only way a person with high debts and poor credit can get a fresh start needed to rebuild your credit rating.

Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation

Call 877-879-4770


When Does My Discharge Take Longer Than 9 Months?

A discharge usually occurs 9 months after you filed bankruptcy although there are some circumstances that will increase the length of time you will be bankrupt before you receive your discharge.

The conditions that increase the time until you receive your discharge include:
* You have already been bankrupt before;
* You have surplus income;
* You do not complete all of your required bankruptcy duties.

Does The Discharge Clear All Debts?

When you receive your bankruptcy discharge all your eligible unsecured debts, such as credit cards, payday loan debt and income tax arrears are erased.

Secured debts cannot be eliminated in bankruptcy unless the security (Such as a vehicle that is leased or a home that is mortgaged) is given up.

The following debts are not erased:

1) child support payments, 2) alimony payments, 3) court ordered damages and awards, 4) debts obtained by fraud and 5) student loan debt if you have ceased being a part time or full time student less than 7 years ago.

Secured creditors are not impacted by your bankruptcy, as secured debts cannot be discharged through going bankrupt.