You are considering bankruptcy because of unmanageable debt. In short, bankruptcy wipes out most debts. Collections are resolved, legal action from your creditors is stopped, and wages are not garnished (except support payments).
Working with a trustee
A trustee is a licensed financial expert who guides you through bankruptcy proceedings. Once you have committed to this arrangement, you must cooperate with the trustee. You surrender all relevant financial documents. The trustee is an important figure, and although they collect a fee, they are the ones who will recommend your discharge from bankruptcy.
You will not lose everything in filing for bankruptcy. Certain possessions for living are granted provincial exemptions, such as clothing, furniture and appliances, and a low-cost vehicle. Other assets will be sold for funds to repay creditors.
You are relieved of most of your debts in bankruptcy but there are a few exceptions. Court fines, fraudulent debts, alimony, court awarded damages remain your liability. In addition, student loans can only be discharged in bankruptcy 7 years after you last studied in school. Bankruptcies do not deal with secured debts unless you give up the security. As long as you are up to date, able, and willing to continue with your payments you can keep assets like your house and car.
Meetings and examinations
You are required to attend two financial counselling sessions to go over the causes of your bankruptcy, how to avoid a future bankruptcy, and to learn responsible financial habits. In certain cases you may be required to attend a meeting of creditors where your creditors can come together to learn about the bankruptcy and speak to the trustee. On rare occasions you may be required to attend an examination by the Office of the Superintendent of Bankruptcy Canada (OSB).
Bankruptcy is not free
We offer free consultations to provide you with information to make an informed decision. However, if you do decide to declare bankruptcy there is a fee to be paid to the trustee that covers certain government fees and administration costs. This fee is usually broken down into monthly payments to make the cost of bankruptcy extremely manageable. As the amount paid in a bankruptcy is based on your household income, you may be required to make surplus payments from your income to the trustee to repay more to your creditors.
Discharge from bankruptcy
When you complete all your duties as a bankrupt and wait the appropriate amount of time, you will be officially discharged from all debts except the non-dischargeable debts discussed above. The length of time you are in bankruptcy depends on how much you repay, your income, the size of your family, and previous declarations of bankruptcy.