Bankruptcy Procedure in Canada

October 29, 2011 by  Filed under: Bankruptcy 

Every year, many Canadians find themselves with such an overwhelming amount of debt, and thus the need to file for bankruptcy. Bankruptcy is a legal process that provides debt relief for those who can no longer pay their creditors, allowing them to immerse from bankruptcy with a fresh start. When an individual enters bankruptcy, no unsecured debtor can take action against you – such as initiating collection action or garnish your wages.

In Canada, the only way to file for bankruptcy is through a Trustee in Bankruptcy. A trustee in bankruptcy is licensed by the Office of the Superintendent of Bankruptcy (OSB) to oversee the bankruptcy process. When you file for bankruptcy in Canada, you will first arrange for a meeting with the Trustee in Bankruptcy. You will discuss your financial situation and your available options to debt relief. The trustee will assess you situation and determine if you are a candidate for bankruptcy. If it is deemed that you are eligible for bankruptcy, the trustee will explain both the benefits and the negative results of filing for bankruptcy.

When you and your trustee have discussed the details and if you are a candidate for bankruptcy, you will work with your trustee to complete the required bankruptcy forms. The trustee will then file for the bankruptcy which includes submitting the appropriate documents to the Office of the Superintendent of Bankruptcy. Once filed, you are formally declared bankrupt. Once bankruptcy is declared, the trustee will deal directly with your creditors.

Once filed, the trustee will liquidate your assets, with the exception of those exempted by federal and provincial laws. The proceeds of the sale of the assets are held in trust to be dispersed to the creditors. During the bankruptcy period, you will also make payments to the trustee to be dispersed to your creditors. Payments will vary, and the trustee will calculate the amount you will be required to pay. The payment amount is calculated by factoring in your income, the income standards issued by the OSB, and your personal situation. In addition, you will attend two counselling sessions so that you can learn the cause of your bankruptcy, how to avoid bankruptcy in the future, and how to manage your finances in the future to help avoid again going into overwhelming debt.

After nine months from filing from bankruptcy, you will automatically be discharged if you have met the specific discharge conditions than include: whether or not this is your first bankruptcy, your discharge is not opposed by the Office of the Superintendent of Bankruptcy, the trustee or a creditor, you have attended all counseling sessions, and you are not required to pay a portion of your surplus income into the bankruptcy estate. If you are granted an automatic discharge, the trustee will inform you and provide a copy of the discharge. It is important to be aware that discharge does not affect/relieve the liability of someone who guaranteed or co-signed a loan on your behalf.

Once discharged from bankruptcy, you will be released from all legal obligations to repay the debts you had at the date you were declared bankrupt – a few exclusions may apply. You will be on your way to start a new life debt free and ready to become a more fiscally responsible individual.

Started in 1992, we are your trusted Bankruptcy Whitby firm serving the Durham region. With years of experience in Bankruptcy trustee Whitby and credit counselling, you can be assured that we get results.

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