Filing Bankruptcy in Canada: Understanding the Process

Filing Bankruptcy in Canada is a process that can be confusing for some people. Regardless, from the start to finish, a Licensed Insolvency Trustee (LIT) can guide you through the process. They will make it easier for you to get your life, and your finances, back on track.

If you have weighed all of your options, and decided that filing for bankruptcy is the best solution, then the first thing you will need to do is contact a licensed insolvency trustee. The Trustee will be able to help you determine if bankruptcy is in fact your best option. They will also provide you with the knowledge you require in order to make a sound decision.

You can only file an assignment in bankruptcy in Canada through a Licensed Insolvency Trustee (LIT).

 How to navigate the bankruptcy process in Ontario.

What to Expect Before You File For Bankruptcy

It’s hard to know where to start when you have to file for bankruptcy. It’s especially hard if this is your first time.

While your licensed insolvency trustee will guide you through the process, it helps to be aware of what the process entails ahead of time.You won’t necessarily lose everything you own.

However, you may have to make some sacrifices in terms of assets or amounts you will have to repay throughout the process. You may have to make surplus income payments to the Trustee (depending on income levels) and you may lose certain tax refunds as well as some GST/HST credits.

Going bankrupt will, however, protect you from creditors continuing any actions against you. This could be actions such as garnishing your wages or seizing your property or bank account(s).

Once you have proceeded you won’t be able to reverse filing for bankruptcy without bringing the issue to court and settling before a judge.

 Declaring bankruptcy for clearing debts requires budget control.

How the Bankruptcy Process Works

To file for bankruptcy you are going to be required to execute several documents. One of these documents is the assignment. This implies that you are assigning all of your property to the trustee for the benefit of your creditors.

All of your property does not include exempt assets. One of the other of many documents is the statement of affairs, which contains a list of your assets, liabilities, family income and expenses.

This is also referred to as a disclosure. The Trustee will furnish you with copies of these documents. Make sure you keep copies of these papers for your records permanently.

When you start the bankruptcy process, the Trustee will prepare the aforementioned documents. Then they will file them with the Division Office of the Office of the Superintendent of Bankruptcy. Once it’s filed you will officially be bankrupt.

Within 5 days of filing your assignment, your creditors will be notified and most creditors will file a proof of claim stating how much you owe them. In some cases there can be creditor meetings, where you physically sit down with your creditors to discuss the affairs of your bankruptcy.

These meetings are usually not necessary for consumer bankruptcy unless your asset base is in excess of a certain amount, or if one is requested by the creditors of the Office of the Office of the Superintendent of Bankruptcy.

Being Discharged From Bankruptcy

Filing for bankruptcy requires keeping track of all finances.You may be eligible for a discharge after just 9 months. This happens if you comply with all of your obligations under the bankruptcy administration and as prescribed under the Act.

You could also be eligible if it’s your first time declaring bankruptcy.

If the Trustee, Office of the Office of the Superintendent of Bankruptcy or a creditor opposes or objects to your discharge, you will have to go to court for a discharge hearing.

There are basically four common types of discharge that can result from your discharge hearing. The Court can make an absolute discharge, a conditional discharge, a suspended discharge, or a refused discharge.

An absolute discharge releases you from your debts completely. A conditional discharge sets certain terms that must be met before you can obtain an absolute discharge.

Usually the terms of conditional order involve amounts you will be required to pay to your estate or duties that must be complete.

A suspended discharge is simply an order that postpones your discharge from bankruptcy to a later (future) date.

Discharge from bankruptcy will lead to more conscious spending and budgeting.

Life After Bankruptcy: What Happens Now?

During the bankruptcy period you will have to check in with your trustee on a regular basis. You’ll have to to provide them with proof of income, tax information and anything else the Trustee requires.

You will also have to attend 2 financial counselling sessions. These are intended to help you prepare for the next part of your life. They will also help you learn about budgeting for your future.

They are also a great resource to prevent you from falling back into financial difficulty in the future. Bankruptcy will affect your credit score and remain on your credit bureau for six years. The upside is that you will get the fresh start you need to carry on with your life and eliminate your stress.

A Licensed Insolvency Trustee Will Help You Prepare for Bankruptcy

Choosing Crawford, Smith & Swallow means you are putting your financial recovery in the hands of professional you can trust. We have over 70 years of experience in the Niagara region, helping both consumers and businesses to get back to financial stability.

If you are experiencing financial difficulty, don’t hesitate to book a free consultation with us today. We’ll help you learn more about your options.

Crawford Smith & Swallow are licensed insolvency trustees in Ontario.