How do I claim bankruptcy in Canada?

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In Canada, it’s crucial to consult a Licensed Insolvency Trustee (LIT) for help with debts; however, be careful as not all trustees are trustworthy. You’ll need to evaluate your finances with the LIT, provide necessary documents, and consider options like bankruptcy or a consumer proposal. If you proceed with bankruptcy, expect to submit forms, possibly hand over non-essential assets, and attend credit counseling. Questions? Reach out via phone, text, or live chat.

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Claim Bankruptcy Canada Question

How do I claim bankruptcy in Canada? I’m feeling really overwhelmed by my debts and think bankruptcy might be the answer. I need clear steps on how to claim bankruptcy in Canada to see if it’s right for me.

From: Anonymous Question
Location: St Johns, Newfoundland Labrador (NL)
Category: personal bankruptcy

Claim Bankruptcy Canada Answer

Get in touch with a Licensed Insolvency Trustee (LIT) to schedule a no-cost meeting and see if you’re eligible for options like bankruptcy or consumer proposals. They’ll need financial paperwork like income statements, debt logs, and asset info.

Evaluate your finances. The LIT will check your income, debts, and assets to see if your debts are more than what you can pay back. You’ll need to provide documents like tax returns, pay stubs, bank statements, and loan agreements. This is all to make sure you’re eligible for bankruptcy, which requires at least $1,000 in unsecured debt that you can’t repay.

Submit bankruptcy forms. Sign and send the necessary paperwork to the Office of the Superintendent of Bankruptcy (OSB). This includes your financial status, monthly income and expenses, and a document to transfer non-essential assets to the LIT. Once submitted, an automatic stay stops creditor actions, and you’ll get a Certificate of Appointment in about 48 hours.

Hand over non-essential assets. Your LIT will handle non-exempt assets like a second home or luxury items to help pay off creditors. What’s exempt varies by province but generally includes things like your main home, work tools, and basic household items.

Fulfill your responsibilities: Surplus Income Payments: If you’re earning over a certain amount, you might need to make monthly payments. Monthly Reporting: You’ll need to regularly update your LIT on your income and expenses. Creditor Meetings: It’s mandatory to attend a meeting with creditors, usually within a few weeks.

Take part in credit counselling. Join two required sessions with the LIT on budgeting, rebuilding credit, and avoiding future debt pitfalls.

Bankruptcy discharge. You’ll generally be freed from most unsecured debts after around nine months if it’s your first time without surplus income. This extends to 21 months if you’re making surplus payments. Longer times apply for repeat cases or creditor objections. Alimony, recent student loans, or court-ordered fines aren’t wiped out.

Think about alternatives. A consumer proposal might be a better fit if your debts are $250,000 or less for individuals or $500,000 for joint filers. This option lets you create a repayment plan without giving up assets. Always be cautious, as not every trustee is trustworthy.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

To claim bankruptcy in Canada, follow these steps:

1. Consult a Licensed Insolvency Trustee: The first step is to meet with a Licensed Insolvency Trustee who can assess your financial situation and explain your options, including the implications of declaring bankruptcy (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 11).

2. Prepare Necessary Documentation: Gather relevant documents such as a list of your debts, assets, income, and expenses. The LIT will need this information to file your bankruptcy application (Bankruptcy and Insolvency Act, RSC 1985, c 11, Subsection 49(1)).

3. File the Bankruptcy Application: The LIT will help you complete and file the required forms with the Office of the Superintendent of Bankruptcy (OSB). This includes a Statement of Affairs which outlines your financial situation (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 49).

4. Attend Meetings: After your application is filed, you must attend a meeting of creditors if one is called by the trustee (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 154).

5. Complete Surplus Income Assessment: If your income exceeds a certain threshold, you may have to pay surplus income during your bankruptcy (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 68).

6. Fulfill Duties and Responsibilities: Comply with all obligations, which may include making monthly payments, attending financial counseling sessions, and reporting income to your trustee (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 158).

7. Receive Discharge: Once you complete all your bankruptcy duties, the trustee will apply for your discharge, which relieves you of the debts addressed in bankruptcy (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 172).

8. Understand Post-Bankruptcy Implications: Learn about the impact of bankruptcy on your credit, finances, and future borrowing (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 178).

Make sure to work closely with your Licensed Insolvency Trustee throughout the process to ensure compliance and assistance.

From: OSB Helper

Related Questions to How To Claim Bankruptcy In Canada

Here are the top 5 most frequently asked questions related to claiming bankruptcy, based on the provided sources and general trends in online searches:

1. What are the steps to file for personal bankruptcy?

• You need to find a Licensed Insolvency Trustee, provide financial documents, file the necessary forms, attend a meeting of creditors, report any changes to your LIT, attend counselling sessions, and await your discharge[1][3][5].

2. What is the difference between bankruptcy and a consumer proposal?

• Bankruptcy involves surrendering assets to pay creditors, while a consumer proposal is a negotiated agreement to pay a portion of your debts over time, typically up to five years[2][4][5].

3. How long does the bankruptcy process take?

• The process typically takes between 9 to 36 months to complete, depending on factors such as surplus income payments and opposition to discharge[3][5].

4. What debts are not forgiven in bankruptcy?

• Secured debts like mortgages and car loans, as well as debts such as alimony or child support, are not forgiven in bankruptcy[2][3][5].

5. What are the requirements to qualify for bankruptcy?

• You must have debts over $1,000 that you are unable to repay, and if your debts are below $250,000, you may be eligible for either bankruptcy or a consumer proposal[1][3][5].

If you have a question about debt see our debt questions or ask your own debt related question.

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