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It is a legal process which enables you, as an honest debtor, to
make a fresh start by relieving you of the burden of most of your
debt. |
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Briefly, the steps are: |
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Choose a Trustee such as Frank J.
Jaglowitz of Collins Barrow. |
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The Trustee will help you prepare a Statement of
Affairs
which lists all of your assets, creditors, income, expenses, and
other pertinent information |
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After you file bankruptcy, most creditors are no
longer able to pursue you for collection of their accounts. |
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You may be requested to attend a bankruptcy interview
with the Official Receiver who is a government official. |
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You will be required to attend two financial counselling
sessions. |
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If you have any assets which you will not be allowed
to keep (see Will I Lose Everything?), you
will be expected to help the Trustee sell them. |
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You will report your income and expenses on a monthly
basis to the Trustee. You may also be required to pay some money to
the Trustee each month depending upon how much you earn, the size of
your family and your circumstances. |
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You will be automatically discharged from bankruptcy
in 9 months if this is your first bankruptcy and there are no
objections. You will have no further obligations for the debts
covered in your bankruptcy. |
Who can file bankruptcy or make a proposal?
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Most debts, but not: |
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| child support, maintenance, alimony |
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Court fines, penalties and traffic offences
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debts obtained by fraud or fraudulent misrepresentation |
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student loans, if less than ten years since leaving university or
college |
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civil claims arising from personal or sexual assault |
More Questions & Answers about
Bankruptcy
How does one become bankrupt?
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First, you meet with a trustee in bankruptcy who will
assess your financial situation and explain the options available to
you as described earlier. If you decide to become bankrupt,
the trustee will help you complete several forms which you will have
to sign. You are considered a bankrupt only when the trustee
files these forms with the Official Receiver. |
What is the bankruptcy fee?
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This fee is set by
the government and is the same for all trustees across Canada. |
Do I have to pay the fee up front?
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No, there are a number of ways to pay the fee, such as
monthly payments or by having a third party pay the fee for you. |
What kind of forms will I have to sign?
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You will have to sign at least two forms. One is
an "Assignment", and the other is your "Statement of
Affairs". In the assignment you state that you are
handing over all of your property to the trustee for the benefit of
your creditors. In the statement of affairs you list your
assets, liabilities, income and expenses. As well you will
have to answer several questions about your family, employment and
disposition of assets.
Before you sign them, make sure you understand the legal documents
that are part of your bankruptcy file. Although the trustee
prepares them from the information you provide, they are your
statements. You are responsible for the accuracy of their
contents. Review them carefully before you sign. Once
these documents have been filed with the Official Receiver, you are
legally bankrupt and, at this point, the process cannot be reversed
without a court order. Keep copies of notices and all other
documents the trustee sends you. |
Can my creditors continue to harass me after
I file bankruptcy?
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No, they may call you, but you should direct their
questions to us. |
Will I be able to keep my vehicle?
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Ontario Provincial law allows a person filing
bankruptcy to keep the equity in a motor vehicle not exceeding $5,650.
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Can my wages be garnished or my assets seized
after I file bankruptcy?
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Normally, all legal proceedings against you stop at
the date of bankruptcy. |
If I file bankruptcy, can I still pay my
family and friends?
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No, while you are in bankruptcy you are only
responsible for paying your ongoing living expenses. All payments to
any of your unsecured creditors stop. |
Will you tell my employer that I filed
bankruptcy?
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No, that is your business. |
Do I still handle my own money?
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Yes, you continue to receive your income and you can
have a bank account if you wish. |
When is a bankrupt discharged?
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There will be an automatic discharge for first-time
bankrupts nine months after they became bankrupt unless the trustee
recommends a discharge with conditions or it is opposed by either a
creditor, the trustee or the Superintendent of Bankruptcy.
The trustee is required to recommend a discharge with conditions if
either of the following circumstances exists:
- the bankrupt did not pay the agreed amount
of surplus
income, or
- the bankrupt filed for bankruptcy instead of
proposing a
viable repayment plan (called a
proposal).
If the bankrupt or a creditor does not agree with the trustee's
recommendations, mediation can be requested as long as there is no
other ground for opposition.
If mediation fails to resolve the issue or if an opposition is
filed, the trustee will have to obtain a date for a court
hearing. The party opposing the discharge will have to give
his or her reasons to a court official who will make a
decision. It should be noted that a first-time individual
bankrupt who refuses or neglects to receive the required counselling
sessions will not qualify for an automatic discharge.
For those who have already been bankrupt before or who do not
qualify for the automatic discharge, the trustee is required within
one year from the beginning of the bankruptcy to apply to the court
for a hearing of the application for a discharge. The court
official has several options from which to choose.
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What happens to my credit cards?
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Your credit cards must be given to the Trustee. |
Will I be able to get credit in the future?
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That will depend on your earning and repayment ability
and will be between the lender and you. |
Do I have to be living in Canada to file
bankruptcy?
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Yes. To make an assignment, a person must reside or
carry on business in Canada. |
What if I win a lottery or receive an
inheritance while in bankruptcy?
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Any "windfall" must be given to the Trustee
to distribute to your creditors. If there is any money left over, it
will be returned to you. |
Can I file bankruptcy more than once?
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Yes, but it may be harder to get out of bankruptcy
after the first time. |
What happens to my R.R.S.P. and/or pension
plan?
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Depending on the type of plan you have, it may be
protected from seizure by Provincial law. If not, it must be paid
over to the Trustee to distribute to your creditors. |
Will I lose everything in bankruptcy?
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In Ontario, what you are entitled to keep is
determined by the Executions Act. In summary, you are
generally able to keep the following property: |
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Necessary clothing and personal
effects up to a value of $5,650. |
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Household furnishings and appliances to a value of
$11,300. |
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Personal property (i.e., tools, equipment,
motor vehicle) that
you require to earn income from your occupation up to a value of $11,300. |
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Motor vehicle up to a value
of $5,650. |
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Federal Legislation also allows you to keep: |
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In certain cases, the cash surrender value of life insurance policies
(including some R.R.S.P.'s) where the beneficiary named is the
spouse, child, parent or grandchild. |
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generally, pension plans. |
Go to Top of Page
| This web site is for general
information purposes only. The major sources of reference were the
Bankruptcy and Insolvency Act of Canada and the Executions Act of
Ontario.
Although every reasonable effort has been made to ensure the
accuracy and timeliness of the information contained herein, no
individual or organization involved in the preparing of this
information accepts any contractual or any other form of liability
for its content or from any consequence arising from its use. |
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