If you’re wondering how to file for bankruptcy, chances are your finances are in bad shape. Filing for bankruptcy can be a confusing process. While it’s important to get the assistance of a licensed debt professional to review your own personal situation, here is some general information that should help you get a better understanding of how the process works and what your next steps should be.
1. Are you eligible to file for bankruptcy?
In order to file for bankruptcy, you need to owe at least $1,000 and be unable to pay your debts. Also, your debts need to be greater than the value of all of your assets. In other words, if you were to sell everything you own and still couldn’t pay off your debts, you would meet that requirement.
2. Why you need a Licensed Insolvency Trustee
According to the rules set by the Office of the Superintendent of Bankruptcy, all bankruptcies must be administered by a Licensed Insolvency Trustee. The role of the trustee is to act as a go-between for you and your creditors, manage agreements and make sure all of the necessary paperwork is filed correctly and in accordance with the law.
3. Gather the necessary documentation.
Come prepared for your first visit with your trustee by bringing all of your financial information, including a list of all of your creditors and how much you owe them. You’ll also want to bring a list of your assets and their value. Your Licensed Insolvency Trustee will also need pay-stubs from all of your employers and copies of your recent tax filings.
Proof of residency and your birth certificate will also provide information your trustee needs to complete the necessary paperwork.
4. Filing for bankruptcy
Once you have made the decision to go bankrupt, your Licensed Insolvency Trustee will prepare all of the necessary paperwork. Your trustee can email the documents so that you can read them before you meet to sign them. You will be required to sign four documents:
- Assessment Certificate, which guarantees that you have received counseling from a Licensed Insolvency Trustee about your options and have chosen to file for bankruptcy.
- Monthly Income and Expense Statement that looks very much like your family budget.
- Statement of Affairs that lists all of the money you owe, your assets, and information about you.
- Assignment for the General Benefit of Creditors, which transfers all of your assets that are not exempt in your province, to your Licensed Insolvency Trustee. This allows your trustee to sell the assets and use the money realized to pay your creditors.
Once you sign these necessary documents, your trustee will send them electronically to the Office of the Superintendent of Bankruptcy. Once they are received and accepted you are legally bankrupt.
5. Attend counseling sessions with your trustee.
You are required to meet with your trustee for two counseling sessions while you are bankrupt. One session should be within the first few months after filing, and one is held before your bankruptcy is discharged.
Knowing what to expect when you file for bankruptcy can help the process go smoother. Your Licensed Insolvency Trustee will administer the entire process and prepare you for a new financial start.