How to Declare Personal Bankruptcy in Canada
In Canada, bankruptcy legally relieves a person in serious debt trouble from their obligations to pay. This means an unsecured entity or person you owe money to cannot take any steps to collect money from you.
Secured creditors are those who loaned you money using your car as collateral, for example. They can take your car in an effort to repay some of the loan when you declare bankruptcy. You may want to work out a payment schedule with them if you want to keep the car.
Begin researching the rules for bankruptcy on Canadian government websites and avoid paying additional fees to third parties.
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Instructions
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Retain a trustee. In Canada, you must retain a trustee licensed by the Superintendent of Bankruptcy. The trustee looks at the entire scope of the debts and will advise you about the pros and cons of bankruptcy. The trustee will give options of possible solutions to the credit problems. The trustee examines your assets and income to ensure that a bankruptcy is necessary.
Inform the trustee of any joint debt between you and a spouse because that person may be accountable for the debt.
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Help the trustee prepare your documents. After a decision is made for bankruptcy, the trustee, with your input, prepares documents for filing with the Office of the Superintendent of Bankruptcy. Then you are declared bankrupt and the trustee handles communications with all of your creditors.
At that point, you are no longer required to make payments to unsecured creditors, and any legal action taken against you will cease.
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Pay your trustee and surrender property. You will surrender all assets to the trustee to sell and the trustee uses the money to distribute to those you were in debt to. Some assets are excluded from this, which is determined by provincial laws. According to Bill McCulloch & Associates, these are things that are necessary for daily life such as household goods, tools of your trade, a motor vehicle and home equity. There is a maximum value allowed for each of these assets. You may also keep clothing and necessary medical aids for you or a family member.
After you file, you may not sell any assets you surrendered to the trustee.
Make payments. During the bankruptcy, you are required to make payments to your trustee for distribution to your creditors. This is determined by rules set by the Office of the Superintendent of Bankruptcy, and by your income and individual situation. A trustee's base fee is usually not less than $1,500.
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Prepare to meet with your creditors. All of the people you owe money will be notified by the trustee that you are bankrupt. If there is a substantial amount owing you may have to meet with the creditors.
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Attend a creditors' meeting, if one is called. If a meeting of creditors is called, you must attend the meeting. This is to satisfy those you owe money to that you have appointed a trustee, they can gather your bankruptcy information and appoint no more than five inspectors (who supervise the management of your property), and the creditors can also instruct your trustee.
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Attend a meeting with the Office of the Superintendent of Bankruptcy, if called. It is possible that you will be called to an examination by the Office of the Superintendent of Bankruptcy to be questioned about the cause of bankruptcy and other information required to decide whether to discharge you.
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Attend debt counseling meetings. You must go to two debt and financial counseling appointments to learn how to avoid financial problems in the future and what steps you could have taken to avoid bankruptcy.
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Help compile a report to the Office of the Superintendent of Bankruptcy, if required. Some cases require the trustee to make a report about your bankruptcy, which is filed with the Office of the Superintendent of Bankruptcy. This is done in an effort to avoid having the court refusing to discharge you.
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Attend a discharge hearing, if one is called. Generally, a person is discharged nine months after filing bankruptcy. Automatic discharge is usually granted if this is the first time you filed for bankruptcy, and the Office of the Superintendent of Bankruptcy, a creditor, or the trustee does not object, and if you have attended the counseling sessions.
If you are required to pay some of your income to the estate, then it will be 21 months before discharge is granted.
Once you are automatically discharged, you will not attend court and the trustee will inform you of the discharge.
If not, the trustee applies for a hearing in court no more than one year from the date you filed for bankruptcy.
In court, the trustee reports the events of the bankruptcy and the court will decide either an absolute discharge, a conditional discharge, a suspended discharge or a discharge refused.
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Get discharged from bankruptcy. Finally, the bankruptcy is discharged and you are not obligated to pay any debts except for certain exclusions, such as alimony and child support payments, student loans, court-ordered fines or any debt incurred from fraudulent activities.
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Tips & Warnings
In bankruptcy, you have a responsibility to disclose the income and expenses of your family unit, including your spouse. The disclosure responsibility falls on you as part of your duties under the bankruptcy. The trustee applies an income guideline, based on your family size, to determine if you are required to pay "surplus income." If your spouse refuses to divulge their income information to you, then there is a penalty to you in that the usual surplus income guideline is cut in half, which potentially increases the amount you would ordinarily be required to pay.
