Struggling with debt and bankruptcy can be a daunting experience. However, it doesn’t have to be when you know who to contact when going bankrupt. This guide outlines the process of declaring bankruptcy and highlights the key professionals you should consider reaching out to.
Engaging a Licensed Insolvency Trustee (LIT)
When pondering bankruptcy, the first professional you should consider discussing your financial situation with is a Licensed Insolvency Trustee (LIT). They are the only professionals authorized by the Office of the Superintendent of Bankruptcy (OSB) to administer bankruptcy processes.
Initial Consultation
The LIT offers a free and confidential initial consultation. Here, they will assess your financial situation and suggest options such as budgeting assistance, debt consolidation, or credit counselling. An LIT can also guide you on how to maintain a good credit rating.
In cases where your debts are soaring or already in collections, your LIT may recommend filing for personal bankruptcy or a consumer proposal.
The Application Process
If you decide to proceed with bankruptcy or a consumer proposal, your trustee will gather all the necessary information and documentation. They’ll discuss what you need to do to successfully complete your bankruptcy or consumer proposal.
Filing for Bankruptcy
Your LIT will guide you through the process of reviewing and signing your bankruptcy documents. Once signed, these documents are filed with the OSB, and your creditors are notified.
The processing of these documents by the OSB puts a stay of proceedings in place, stopping all legal actions, wage garnishments, and other collection activities from your creditors.
Handling Debt Payments
Your trustee will advise you to stop paying your unsecured creditors and continue paying your secured creditors, such as your mortgage and vehicle loan. This is assuming you’ve decided to keep these assets.
If you choose to surrender these assets, you can cease these payments, allowing the creditor to reclaim their security and file an unsecured claim in your bankruptcy estate for any balance owed once the security is sold.
Dealing with Creditors’ Claims
Your creditors will file claims, either secured or unsecured, in your bankruptcy estate. Your trustee will review these claims and decide which ones are admitted or disallowed. Any disallowed claims will be discussed with you.
Unsecured creditors with admitted claims will share in any proceeds paid out from your bankruptcy estate. Secured creditors with valid claims will likely give you the option to continue with payments or surrender the asset secured by their debt.
Trustee’s Fees
If the sale of non-exempt assets isn’t enough to cover the trustee’s fees, you’ll need to make monthly payments to cover these costs. This is usually discussed during the application process, so there shouldn’t be any surprises.
Mandatory Financial Counselling
During bankruptcy, you’ll be required to attend two counselling sessions to develop budgeting skills, review money management, and set future financial goals. These sessions aim to help you understand the warning signs of financial difficulty and learn how to manage credit post-bankruptcy.
Monthly Reporting
You’ll be required to submit monthly income and expense reports during your bankruptcy. Your trustee will use these reports to determine any surplus income obligations.
Discharge
Once all your bankruptcy duties are completed, you’ll receive a discharge. If some duties remain incomplete, you’ll need to attend a court hearing where the Bankruptcy Court will outline what you must complete before being discharged from bankruptcy.
Remember, each situation is unique, and your trustee will provide information specific to your circumstances. Most LITs offer a free consultation to review your situation and outline the options.
In conclusion, if you’re having difficulty paying your debts, contacting a Licensed Insolvency Trustee should be your first step. They can help you explore all your options, including filing for bankruptcy or a consumer proposal, and deal directly with your creditors on your behalf.
