How do you declare bankruptcy in Canada?

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Thinking about declaring bankruptcy in Canada? Your best first step is to chat with a Licensed Insolvency Trustee (LIT) who’ll assess your financials for free. They’ll guide you through filing, halting creditor actions. Prepare for possible asset handovers, surplus payments, and credit counseling. Consider consumer proposals if debts are below $250K.

Remember, choose your trustee wisely. Trustees are funded by lenders and creditors, meaning they don’t work in the best interest of Canadians in debt. They can also double bill or add extra charges. Stay alert! Reach out by phone, text, or live chat for help.

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Declare Bankruptcy In Canada Question

How do you declare bankruptcy in Canada? I’m really stressed about my growing debts and have heard bankruptcy might be an option. I need to know the process for declaring bankruptcy in Canada so I can decide if it’s right for me.

From: Anonymous Question
Location: Surrey, British Columbia (BC)
Category: personal bankruptcy

Declare Bankruptcy In Canada Answer

If you’re thinking about declaring bankruptcy in Canada, the first step is to reach out to a Licensed Insolvency Trustee. They’ll give you a free assessment of your financial situation, helping you understand if you meet the eligibility criteria like having over $1,000 in debt, being unable to pay your bills, and being a Canadian resident. The LIT will also assist you with filing the necessary paperwork, including the Assignment and Statement of Affairs. Once the paperwork is in, an automatic stay will stop creditors from pursuing you.

During the bankruptcy process, you might have to give up some non-exempt assets and, if you’re earning more than the government threshold, make surplus income payments. Plus, you’ll attend mandatory credit counseling to get back on track. The discharge period typically spans from 9 to 21 months, depending on your unique circumstances. After discharge, most unsecured debts are cleared, but remember, bankruptcy can reflect on your credit report for up to 7 years.

If your debts are under $250,000, consumer proposals might be an option worth considering as an alternative. And hey, not all trustees are created equal, so make sure to choose wisely. Licensed Insolvency Trustees are funded by lenders and creditors, not by Canadians facing debt issues. They can also charge extra fees or bill you twice. If you have any questions along the way, feel free to reach out via phone, text, or live chat.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

To declare bankruptcy in Canada, follow these key steps:

1. Eligibility: Ensure you meet the qualifications to file for bankruptcy. Generally, this includes being insolvent, having debts exceeding $1,000, and being unable to pay your debts as they become due (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 2).

2. Consult a Licensed Insolvency Trustee (LIT): You must work with a licensed trustee who will guide you through the bankruptcy process. They will assess your financial situation and explain the implications of filing for bankruptcy (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 12).

3. Filing the Bankruptcy Application: The LIT will help you complete the necessary paperwork, which includes a statement of your financial affairs and a bankruptcy application (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 42).

4. Creditors Meeting: After your application is filed, a meeting with your creditors may be called. This gives creditors an opportunity to ask questions about your finances (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 40).

5. Obtain the Order of Bankruptcy: Once the application is accepted by the LIT and requirements are fulfilled, an order of bankruptcy will be issued by the court (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 49).

6. Complete Required Duties: You will need to fulfill certain obligations during your bankruptcy, such as attending credit counseling sessions and submitting income reports (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 68).

7. Discharge from Bankruptcy: Typically, bankruptcy lasts for nine months to three years, depending on your situation. After completing all requirements, you will be discharged from bankruptcy, relieving you of most debts (Bankruptcy and Insolvency Act, RSC 1985, c. B-3, Section 68).

It’s crucial to obtain professional guidance throughout this process to ensure it aligns with your financial circumstances.

From: OSB Helper

Related Questions to How To Declare Bankruptcy In Canada

Here are the top 5 most frequently asked questions related to declaring bankruptcy, based on common queries and current trends:

1. What are the eligibility criteria for filing for personal bankruptcy?

To be eligible, you must owe at least $1,000 and be unable to pay your debts as they become due[1][2][3].

2. How long does the personal bankruptcy process typically last?

The process typically lasts 9 months, but can extend to 21 months if you have surplus income[1][3][5].

3. What debts can be discharged through personal bankruptcy?

Most unsecured debts, such as credit card debt, personal loans, and certain tax debts, can be discharged. However, student loans (if less than 7 years since leaving school), child/spousal support, and secured debts are not dischargeable[1][3][5].

4. How does personal bankruptcy affect my credit score?

Personal bankruptcy will negatively impact your credit score and remains on your credit report for 6-7 years from the date of discharge[1][3][5].

5. What assets are exempt from being seized during personal bankruptcy?

Typically exempt assets include your primary motor vehicle (up to a certain value), household furniture or equipment, personal items and necessary clothing, and tools required for trade work[1][2][3].

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

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