A lot of us are familiar with the term “bankruptcy” but don’t fully understand how bankruptcy works and what the long-term implications are.
Our intention is to help you understand the bankruptcy process in Canada.
What is Bankruptcy?
Simply put bankruptcy is a legal resolution for debts. It falls under the Bankruptcy and Insolvency Act and is an option for insolvent persons.
What Are the Steps Involved in Declaring Bankruptcy?
You need a Licensed Insolvency Trustee (LIT) to declare bankrukptcy.
Filing for Bankruptcy
The paper work is prepared by your LIT based on the info you provide, such as debts, income, assets, transfers etc. Then he will file those papers with the Superintendent of Bankruptcy.
Once filed, your creditors will stop pursuing you, no legal action can be taken against you and they can’t garnish your wages. In some circumstances wage garnishments can be recovered. Time is of the essence in this regard.
What Happens to Your Debts and Assets When You Go Bankrupt?
This depends on your province. There are exempt assets you’re allowed to keep when you file a bankruptcy. If you have more than the exempt amount, assets will be sold to pay your debts. This is rare as most do not have more than the limit. You should also know that some debts receive special treatment in the bankruptcy. Some of these types of debts are spousal and child support payments, some student loans, court fines and more.
Obtaining Discharge and Getting Back on Track
Receiving a discharge is the most important part of the bankruptcy. A discharge means you no longer owe money to creditors and that you can start rebuilding your credit. To obtain a discharge is very straight forward and the LIT will explain each step, and help you complete them so that you can move on from debt and start living again.
Reynolds & Associates Inc. is a Licensed Insolvency Trustee. Call today.