What about my student loan debt?

Any debt owing to the Federal or Provincial Student Loan Programs will be discharged upon an individual’s discharge from bankruptcy, if the last date of study was more than 7 years prior to the date of filing. Amendments to the Bankruptcy and Insolvency Act that came into force on July 7, 2009 reduced this period from 10 years to 7 years. The same applies for a Consumer Proposal filing. If the Student Loan debt is applicable to a period within 7 years, the debt will be collectable after the Trustee has closed the bankruptcy or proposal file and obtained its discharge. Interest will continue to accrue during the period of the bankruptcy or proposal, but the creditor will not be able to actively collect the debt owing.

Where can I find a copy of the Bankruptcy and Insolvency Act of Canada?

The Canadian government provides an online and printed version of the Act on their website.

What if my wages are being garnished?

Upon filing your bankruptcy, all legal actions such as garnishments, seizures or law suits are immediately halted.

How will filling a proposal or bankruptcy affect my credit rating?

The filing of a proposal or bankruptcy will be reported to the credit reporting agencies, and will remain on your credit history for a period of three years from the date of completing a proposal, or six years from the date of discharge from bankruptcy.

How long will I be in bankruptcy?

If it is your first bankruptcy, you are entitled to an automatic discharge from bankruptcy after 9 months from the date of filing, provided that you do not have surplus income payment requirements, and there is no opposition to the discharge from any creditor, the Superintendent of Bankruptcy or the Trustee. If you do not qualify for automatic discharge, an application will be made to the Court for a hearing, and the Court will issue an Order determining your discharge based on the circumstances. Where an individual’s average income during the initial bankruptcy period is above the income guidelines set by the Superintendent of Bankruptcy and they are required to pay surplus income to the estate, the term of the bankruptcy will be 21 months. If you have been bankrupt previously and have surplus income payment requirements, the term of bankruptcy will be up to 36 months. If you have been bankrupt previously but do not have surplus income payment requirements, the term of bankruptcy is 24 months. The Trustee will review your financial and personal situation upon filing and advise you accordingly.

When I am bankrupt will I still be able to operate my business?

Yes, but you can’t be a director of a corporation while you are bankrupt. You must remit quarterly instalments to Canada Customs and Revenue Agency if you are self-employed. You must disclose to any prospective creditor that you are a bankrupt before you request credit in your personal capacity while you are bankrupt.

What is a secured creditor?

A secured creditor is a creditor who has registered a security interest or a lien against your assets for the amount owing. For example, a financial institution through which you have obtained financing for a vehicle will usually register an interest against the vehicle until the loan agreement is paid in full.

Which assets can I keep?

Provincial legislation provides for exemptions that you can claim on certain personal assets such as household and personal effects, your vehicle, equity in property, and tools of your trade. These exemptions are based on the resale or liquidation value of the assets. We can advise you on these exemptions and how they pertain to your situation.

Can I keep my RRSPs?

Recent amendments to the Bankruptcy and Insolvency Act allow for Registered Retirement Savings Plans (RRSPs) to be claimed as exempt property, except for any contributions made to the plan within the 12 months prior to a bankruptcy filing. RRSP plans held with an insurance company may be exempt from seizure for the total amount, depending upon the beneficiary details. Registered pension fund accounts are also usually exempt from seizure. Registered Education Savings Plans (RESP) are considered to be property and are not allowed any exemption in a bankruptcy. The Trustee is required to liquidate any non-exempt assets for distribution to your creditors. The Trustee will review your assets thoroughly and advise how they will be affected in your particular circumstances.

How do I pay the cost of filing bankruptcy?

The cost of administration is set by the government and includes fees relating to the required counseling, filing fees and GST. We offer monthly payment arrangements over the course of the bankruptcy period.

Are there debts that are not dealt with by a bankruptcy?

Certain debts will not be discharged by a bankruptcy. These include arrears for spousal or child support, student loan debt if the last date of study was within 7 years of filing bankruptcy, fines imposed by a court, or any debt related to fraud or misrepresentation. If you have any debts of this nature, the trustee will be able to provide further information.

What is the first step in filing for bankruptcy?

The first step is to meet with the one of our professionals and provide the information necessary to prepare bankruptcy documents. We will file the necessary documents and notify your creditors.

Can I keep any of my credit card accounts if they are not overdue or have no balance owing?

All credit cards must be turned over to the trustee upon filing a proposal or bankruptcy, even if there is no balance due. The trustee is required to return the cards to the issuer for cancellation.