The Bankruptcy laws in Canada are meant to give the honest and unfortunate debtor a fresh start. Most individuals use credit with the good intention to pay back the money borrowed. Sometimes, circumstances occur where paying back that debt load is no longer possible. When these circumstances arise, it may be necessary to consider bankruptcy as an option.
In order to file for bankruptcy in Canada, you must be insolvent. Being insolvent under the Bankruptcy laws mean that you:
- Must owe at least $1,000.00, and;
- You must not be able to meet your debts as they are due to be paid.
If you meet the criteria, the first step is to meet with a Trustee in bankruptcy. In Canada, Trustees are federally licensed and their fees are regulated by the government. The Trustee will take the time to explain the bankruptcy process and will answer all of your questions. They will also complete an assessment of your financial situation to make sure that bankruptcy is the right option.
When you file for bankruptcy, you are protected from most collection activity. There is a legal stay of proceedings in place that prevents your creditors from taking legal action or garnishing your wages. During this “stay of proceedings” the bankruptcy administration continues and you will be required to complete a few key duties. The trustee will also be required to complete a few tasks, including realizing on any assets that may be available to your creditors.
Once the bankruptcy process is completed, the debtor will receive a certificate of discharge. This document is what releases you from your debts, with a few exceptions. While the bankruptcy is on your credit report for several years, you can start to rebuild your credit upon receipt of your discharge certificate.
Making the decision to file for bankruptcy is never easy. Working with a licensed, trusted advisor will make the process simpler and help to lower the stress of carrying your debt problems.
For more information on Bankruptcy please visit Bankruptcy-Canada.ca.