1. What is Bankruptcy?
Bankruptcy is a legal process regulated by the Bankruptcy and Insolvency Act that is available to people that can no longer find a solution to their financial situation. Bankruptcy is an option that allows someone to “start over with a fresh start”. When you declare bankruptcy, your goal is to get what is called a discharge. A discharge means that you are free and clear of all your debts and you are no longer bankrupt. If you have never been bankrupt before you may be entitled to an automatic discharge in nine months from the date you file for bankruptcy.
2. What are the Duties & Responsibilities in a Bankruptcy:
a. Notify the Trustee of all assets and liabilities at the date of bankruptcy
b. Where you receive additional bills or legal documents, they should be forwarded to the Trustee. If assets or debts were accidentally omitted, the Trustee must be informed promptly.
c. Attend two (2) mandatory counseling sessions
d. Keeping the Trustee advised of your address, phone number and place of employment
e. Providing the Trustee with income tax returns or if your self employed you will provide to the Trustee your books, records and bank statements.
f. Surrendering all credit cards to the Trustee
3. What Is A Consumer Proposal?
There may be other options for you besides bankruptcy. One is a consumer proposal. This is part of the Bankruptcy and Insolvency Act but not a bankruptcy. With a consumer proposal, you are making an arrangement to your creditors through our office basically saying that you will pay the trustee a monthly payment for so many months (you determine how long you will pay this for) and then the trustee will distribute the money to your proven creditors.
4. What If My Wages Are Being Garnished?
Whatever option you decide to do with our office, most wage assignments and garnishments are stopped with a Stay of Proceedings which halts all garnishments, lawsuits or other Court proceedings initiated or that my be initiated by your creditors. Only the court may grant permission for creditors to continue action against you, once you are bankrupt.
5. How Will My Credit Rating Be Affected?
A record of your credit rating is recorded and updated by various credit bureaus such as Equifax and Trans Union. These bureaus provide information to financial institutions and other companies. Although your bankruptcy will be noted by the credit bureau for a period of time as an R9, you are able to request credit once you are discharged which generally occurs in approximately nine months. Your ability to obtain and use credit will depend on your personal financial situation.
6. How Much Will It Cost?
What a bankruptcy will cost you will depend on your income and family size. There are standards set out by the government that give guidelines as to how much a person should pay based on their income and family size. Our friendly staff will be pleased to review this with you.
7. If I go bankrupt, will I lose everything?
No! Although the Trustee may use some of your assets to help pay your creditors, every province has a list of assets that are considered “exempt”. For instance, in many situations, you can keep your house and car in a bankruptcy, as long as you continue to pay your secured creditors. You can also keep your furniture, personal items, and various equipment you need for your work.
8. What assets are exempt?
Many personal assets are “exempt” during a bankruptcy. See backgrounder page for a complete breakdown of assets.
9. Once I declare bankruptcy, what happens to the money I owe?
Once you declare bankruptcy, you will no longer have to deal directly with your unsecured creditors. Instead, the Trustee will work with your creditors to pay them some of the money they are owed. That means most lawsuits and wage garnishments against you will stop.
10. What happens if someone co-signed a loan for me?
Anyone who has co-signed a loan for you will still be responsible to make loan payments after you go bankrupt.
11. Will I still owe income taxes after I declare bankruptcy? What about Tax Refunds?
Some people fear that they will still owe income tax arrears after they declare bankruptcy. In truth, once you are discharged from bankruptcy, most of your existing debts to the Canada Revenue Agency (formerly Revenue Canada) will be forgiven. However, if you continue to earn money after you declare bankruptcy, you will owe income taxes on the money you earn.
A tax return for the period of January 1st to the date of bankruptcy will be prepared by the trustee (pre-bankruptcy return). Any tax refund for that period as well as refunds of previous years not yet received will be remitted to the trustee for deposit into your estate. Another tax return will be prepared for the period from the date of bankruptcy to December 31st (post-bankruptcy return). Any refund from this tax return will also be paid into the bankruptcy estate.
12. Will I still owe money after I declare bankruptcy?
Even when you declare bankruptcy, you will still owe money on certain debts. These include Canada and Newfoundland student loans that are less than seven years old; alimony, child, or spousal support; certain court fines or penalties; and debts you incurred due to fraudulent misrepresentation.
13. How Do I Go About Filing A Bankruptcy Or A Proposal?
The best way to get detailed information for your situation is to contact us by telephone and/or email in Vancouver at 604-697-8800 or firstname.lastname@example.org. We will be happy to assist you.
14. I have not been discharged from my first bankruptcy. My trustee has been discharged. How do I obtain my discharge?
You should contact the trustee who handled your bankruptcy. The trustee will inform you of the reason why you did not obtain your discharge. You may have to fulfill certain conditions in order to obtain this discharge.