Bankruptcy Info.

Coming to terms with insolvency can be emotionally draining and overwhelming. Constant calls from creditors/debt collectors at home and even at work can cause sleepless nights. They can also harm relationships and affect a person’s work performance.

The final solution to insolvency is to apply for protection under the federal Bankruptcy and Insolvency Act, either by filing a proposal or by making an assignment in bankruptcy.

What Is Bankruptcy?

Bankruptcy is a legal proceeding available to people who are coping with a financial crisis. One of the main purposes of bankruptcy legislation is to allow people who are hopelessly burdened with debt to free themselves of the debt and start fresh with “a new financial lease” on life.

To go bankrupt, a person must be insolvent. To be insolvent means to:
a) Owe at least $1000
b) Not be able to meet your debts, as they are due to be paid.

Will My Creditors Stop Harassing Me?

Yes, they will. By law, all actions against a bankrupt must cease once the documents are filed. This does not apply to secured creditors such as banks holding, for example, a lien on a car or a mortgage.

Who Will Know That I Have Gone Bankrupt?

Any legal filing of a bankruptcy is a public document that the general public has access to. The credit bureaus—TransUnion and Equifax—are notified, and the bankruptcy will report on your credit bureau report for 6 years from the date of the discharge in the case of a first bankruptcy. For a second or subsequent bankruptcy, the information will report for 14 years on the Equifax Bureau and for the rest of your life with TransUnion. This, however, does not mean that credit cannot be obtained during this time.

How Much Am I Allowed to Keep?

Visit the Government Site for a list of properties in your province that are exempt from seizure in bankruptcy. If you are considering bankruptcy, we highly recommend you visit this site.

When Is the Bankruptcy Over?

For those people who have not been bankrupt before, an automatic discharge can take place after nine months if the creditors, Superintendent of Bankruptcy, or your Trustee have not opposed your discharge and you have received insolvency counselling.

The law allows for a formal process of declaring insolvency by filing either a consumer proposal or an assignment in bankruptcy. Declaring insolvency is a last resort for the overcommitted debtor because of the social stigma attached to this drastic measure and its detrimental effect on the bankrupt’s credit rating. However, bankruptcy may be the only alternative for individuals or families with insufficient income to cover their regular living expenses and repay their debts in full.

Bankruptcy and Power of Attorney

Did you know that if you hold Power of Attorney for someone and you file for Bankruptcy, that Power of Attorney is no longer valid? This is another reason to investigate Bankruptcy carefully before you go down that road!

Bankruptcy is a sad economic fact of Canadian life, and for the most part, financial insolvency is not about money but about circumstances in life. Just remember your credit rating is not a reflection of your personal worth. It is a credit industry tool.

Solutions Credit Counselling Service Inc. is a government-licensed debt repayment agency.