The Bankruptcy and Insolvency Act governs the whole area of bankruptcy and is designed to act as a safety net for the people who find themselves over their head in debt.
While bankruptcy is not the only solution to debt problems or money trouble, it is sometimes the best solution.
We are here to help you figure out whether bankruptcy is right for you and – if it is – provide bankruptcy services to help you file.
In order to qualify for bankruptcy, you must be insolvent, (which means you are in a situation where your non-exempt assets, if sold, would not pay your debts) or be unable to pay your debts as they become due.
When you go bankrupt you assign all your assets – everything you own, have a right to, or interest in – to the Licensed Insolvency Trustee (LCTaylor) for the general benefit of your creditors.
Some assets – usually your household furnishings, your car, tools of your trade, your residence, your RRSPs and some insurance policies- have exemptions from bankruptcy, meaning that they are not signed over as part of the bankruptcy. Farmers are often eligible for other exemptions, over and above the ones listed above.
Your Licensed Insolvency Trustee will be able to define more precisely what assets are exempt and how the exemptions apply in your particular situation. There are, however, several exceptions to this, depending on the province in which you live.
The Bankruptcy and Insolvency Act also states you should – if you can afford it – make payments to your creditors through the course of a bankruptcy. Your monthly payment capabilities will be worked out with your Trustee and will vary depending on your financial circumstances.
How to claim bankruptcy?
Filing for bankruptcy is not as difficult as you might think. In fact, making the decision to proceed with insolvency is typically the toughest part.
Once you realize that you need professional assistance with your debt, the process begins by contacting a Licensed Insolvency Trustee. Trustees are the only licensed, federally-regulated individuals authorized – and required – to help hard working Canadian debtors like yourself.
At your initial, free consultation, you’ll provide your trustee with the information they need to gain a comprehensive view of your current financial circumstances. Your trustee will discuss all available debt relief options with you, their pros and cons, and even provide a seasoned, educated opinion as to which would work best in your situation. There are often solutions other than bankruptcy that may fit your needs and situation better. All options will be reviewed.
If you ultimately decide to proceed with bankruptcy, your trustee will work with you to prepare the requisite paperwork. Your trustee will then have you come in again, explain the process once more, review the paperwork for accuracy, and – if you want to go ahead – have you sign the documents.
The trustee then files the paperwork and notifies your creditors of the bankruptcy. It’s at the point of filing that your creditors must stop their collection efforts against you. Contact us today to get started on your journey to a better financial future.
Will I lose everything?
In short, no. Bankruptcy was created so that hard working, honest debtors could get a fresh financial start. The process isn’t meant to leave you empty-handed. That said, if you have a lot of assets, you can expect to lose some of them.
Personal bankruptcy exemptions are those assets that are protected from liquidation in the bankruptcy process. They are intended to cover the necessities of life. However, what you can keep varies across the provinces.
In Manitoba, you will be allowed to keep:
- Furniture and household appliances up to $4,500;
- Some Health aids;
- Food and fuel necessary for you and your family for six months, or the cash equivalent;
- Tools that you require for work up to $7,500. This includes one motor vehicle of a value up to $3000, if you use it to get to and from work.
- Pension and retirement savings;
- There is a small exemption for equity in your home. Whether you keep your home of not will depend on your specific circumstances.
Remember, if you’re behind on your mortgage or car payments, your secured creditors can still protect their interest despite your bankruptcy filing.
Contact us today to learn more about what happens when you file for bankruptcy.
Will bankruptcy affect my spouse?
No. Or at least, not directly. A consumer bankruptcy filing is personal to the individual filing. Your debts are yours and yours alone. Creditors cannot go after your spouse for debts in your name, and your spouse’s credit rating will not be affected by the bankruptcy you file. Likewise, the debts discharged in your bankruptcy are yours. Your spouse is still responsible for their own personal debt.
There is an important exception. Your spouse will be liable where he or she signed for the debt. Credit cards or loans that your spouse guaranteed or co-signed are legally also their obligation.
Sometimes the implications of one’s actions are not so clear cut. For example, in Manitoba, your partner may be responsible for your credit card debt where:
- Your spouse requests a secondary card and signs an agreement accepting full responsibility for the card’s current and future debt; or
- The credit card company sends your spouse a card in his or her name with your primary cardholder number, and your spouse signs and uses the card. Your spouse will be liable for both current and future debt on that card.
There may also be an indirect impact of the bankruptcy filing on your spouse. If you wish to obtain joint financing in the future, you may have difficulty co-signing a loan or obtaining credit because of your bankruptcy. Or if you are eligible for such credit, the interest rates may be higher.
Contact us today to learn more about how bankruptcy will affect you and you family.