What to Expect If You File for Bankruptcy
Filing for bankruptcy can be the right choice if you are struggling to deal with your debts.
A Licensed Insolvency Trustee can help you to decide if bankruptcy is the right choice for you so that you can take the best path available.
In order to file for bankruptcy in Canada, you must be insolvent and owe at least $1,000.
If you are trying to decide if bankruptcy is the right option for you or you have made a decision and want to know what to expect, this guide will let you know what will happen when you file for bankruptcy.
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Speak to a Licensed Insolvency Trustee
The first step, if you have not already taken it, is to find a Licensed Insolvency Trustee (LIT).
An LIT is a professional who is licensed and qualified to provide you with advice regarding bankruptcy and insolvency, and they also act as a trustee when you choose the file for bankruptcy.
You can use the Bankruptcy Canada search engine to look for a local trustee.
The trustee will talk to you about the options that are available to you, including bankruptcy and filing a consumer proposal.
They will talk to you about your income, your assets, and your debts, and help you to make a decision about what is best for your situation.
File for Bankruptcy
If you decide that bankruptcy is the right choice for you, filing a bankruptcy application is the next step.
Your trustee will make the application with the Office of the Superintendent of Bankruptcy Canada.
Filing bankruptcy requires you to fill out a number of forms, which your trustee will then file.
Once the documents have been filed, you will then be formally in bankruptcy.
What Happens When You’re in Bankruptcy
After you have applied for bankruptcy, your trustee will take care of legal obligations.
You will stop making payments directly to your creditors.
If there are any legal actions against you, these will no longer be valid and you will not be able to have your wages garnished because your trustee is now in charge of your file.
There are also certain legal obligations that you will have to meet.
There are certain assets that you will be able to keep, as they are defined as minimum essential assets.
What you will be able to keep depends on where you live, as it is affected by both federal and provincial laws.
However, there are some assets that your trustee might sell so that they can cover your debts.
You are required to attend two credit counselling sessions, which are designed to help you build a better financial future.
You may also need to make payments toward your debt called surplus income payments if you earn enough.
Your debts can be discharged in as few as nine months, although it can take longer.
However, there are some debts that cannot be discharged, such as secured debts and legal fines.
Your credit rating will also be affected for a number of years.
Start getting help with your finances and bankruptcy by looking for a Licensed Insolvency Trustee.
Bankruptcy Canada can help you to find the right LIT to meet your needs.
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