Answers to the 7 Most Important Bankruptcy Questions

  • By Leigh C. Taylor, B.A., CPA, C.I.R.P.

Are you considering bankruptcy in Canada?

Here are the answers to some of your most important bankruptcy questions.

1. Will I lose my house if I file bankruptcy in Canada?

Not likely. Nowadays, people who claim bankruptcy rarely lose their homes, depending on the amount of equity they have in the home.

It is very important to speak to a Licensed Insolvency Trustee so that you know what’s what.

In most cases, you will also get to keep your personal belongings, household furnishings, registered pensions, and RRSPs, as well as your car, and anything you use for work, such as tools.

Each Province in Canada has unique legislation that governs what assets are protected from your creditors. You’ll need to contact a local Insolvency Trustee for detailed information on exemptions in your province.

2. What happens when you claim bankruptcy?

A Licensed Insolvency Trustee files the paperwork.

A copy of the paperwork goes to your creditors to notify them so that they can file their claim with the Trustee.

You’ll submit monthly income and expense statements to your Trustee.

Plus, you’ll attend two financial counseling sessions.

Then, once you have satisfied the required terms, you’ll receive a discharge. Typically, it’s automatic.

When that happens, your debts are discharged. And you can make a fresh start.

3. How does bankruptcy affect my spouse?

It doesn’t really. Collection agencies may tell you differently.

But, legally, your debts belong to you.

And creditors cannot go after your spouse for money that you owe.

Of course, if your spouse is a co-signer on the debt, that’s different. Then it’s their debt as well.

4. How many times can you declare bankruptcy in Canada?

There is no limit to the number of times you can declare bankruptcy in Canada.

However, you must be discharged from the previous bankruptcy before you can file again, and discharge will be increasingly difficult to get with each bankruptcy.

It’s best to consult a Licensed Insolvency Trustee to better understand your options.

5. How long does bankruptcy last?

If this is your first bankruptcy, you could be discharged in as little as nine months.

If you have surplus income—that’s income above the government limit set by household size—it will take 21 months.

6. When will creditors stop calling?

When your Trustee files the bankruptcy documents on your behalf, creditors must stop contacting you directly. The Trustee issues a legal “Stay of Proceedings,” preventing creditors from taking any collection activities against you.

No phone calls, no letters, everything stops.

This includes the garnishment of wages.

Also, if there are court actions against you, this will stop, as well.

It is important to note that, if you have any debts that are not dischargeable in bankruptcy, such as child support or alimony, those debts will not be erased, and payments are likely to continue during the bankruptcy.

7. Can I go to jail for my debts?

This bankruptcy question is asked with surprising frequency.

But, no, there is no debtors’ prison in Canada.

Oh, and in case you’re wondering, it’s illegal for your employer to fire you because you’ve filed for bankruptcy protection.

They may not know unless you tell them.

There you have it – answers to your most important bankruptcy questions.

You could be debt-free in as little as nine months.

Schedule your free consultation with a Licensed Insolvency Trustee to find out more.

They are the only licensed agents who are able to help with this important decision.

For Bankruptcy information in Manitoba or Northwestern Ontario, contact LCTaylor at 1-800-463-8371

Leigh C. Taylor, B.A., CPA, C.I.R.P.

Leigh has been working in the insolvency field since 1975. He is a graduate of the University of Manitoba. Leigh began his career as an Official Receiver with the Office of the Superintendent of Bankruptcy. He is a Certified Professional Accountant, and he attained his license as a Licensed Insolven Read More Leigh has been working in the insolvency field since 1975. He is a graduate of the University of Manitoba. Leigh began his career as an Official Receiver with the Office of the Superintendent of Bankruptcy. He is a Certified Professional Accountant, and he attained his license as a Licensed Insolvency Trustee in 1980. Leigh has been a member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) since its inception. He is a Past President of several organizations, including the Manitoba Association of Insolvency and Restructuring Professionals (MAIRP), the Armstrong Point’s Association, and the Manitoba Opera. In addition, he has served for numerous years in leadership roles in Winnipeg churches. Close

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