What to expect if you declare bankruptcy?

What exactly is bankruptcy?

Bankruptcy is a legal procedure administered under the Bankruptcy and Insolvency Act. If you are unable to pay off your debts, you hand over all of your seizable properties to a licensed insolvency trustee. This process releases you from most of your debts, and any proceedings initiated against you by creditors should cease.

What does bankruptcy entail?

Bankruptcy is a legal process under the Bankruptcy and Insolvency Act that discharges you of your commitments to creditors and cancels all of your debts, with some exceptions. The purpose of the Act is to enable honest but unlucky debtors to discharge themselves of debt under reasonable conditions.

Generally speaking, you may declare bankruptcy if you owe at least $1,000 and are unable to pay off your debts before they are due. The purpose of the process is to free you from your debts, under reasonable conditions and through a financial reorganization, and let you make a fresh start.

You can voluntarily declare bankruptcy by filing an assignment in bankruptcy with a licensed trustee in insolvency (the “trustee”), or become bankrupt involuntarily, if one or more creditors file an application in court for a bankruptcy order against you. The bankruptcy process is administered by a trustee pursuant to the provisions of the Bankruptcy and Insolvency Act.

Your bankruptcy may be administered as a summary bankruptcy or an ordinary bankruptcy. The main difference between the two, from the viewpoint of the bankrupt, is that in cases of summary bankruptcy, there is normally no creditors’ meeting and no notice of bankruptcy in the newspapers. Most personal bankruptcy cases are administered as summary bankruptcies.

Once you are bankrupt, unsecured creditors (for example, credit card companies, institutions that have given you personal loans, etc.) are no longer able to seize your assets or sue you. If someone seizes your property or income, or threatens to, you can contact us immediately for advice as to your rights.

While you are bankrupt, you must make reasonable monthly payments to the trustee. The way property is dealt with and the amount of the monthly payments depends on each person’s circumstances. For more specific advice, you must consult a trustee.

If this is your first bankruptcy, you will normally be bankrupt for 9 or 21 months, provided you meet all of your obligations and commit no offences relating to the bankruptcy. If this is your second bankruptcy, you will be bankrupt for 24 or 36 months. The longer bankruptcy periods (21 and 36 months respectively) apply when you must make surplus income payments to the trustee. If you previously declared bankruptcy and did not respect your obligations, or committed at least one offence relating to the bankruptcy, you will remain bankrupt for a period determined by the court, which takes into account the trustee’s recommendations and any additional information provided by you and your creditors.

After you receive an absolute discharge, you are no longer responsible for any of your discharged debts. However, the fact that you were bankrupt will appear in your credit rating for approximately six years after you receive the discharge (and for approximately 14 years if this is not your first bankruptcy).

When is bankruptcy a good debt solution?

Bankruptcy is a good solution when all other recourses are unavailable, or you cannot repay even a part of what you owe your creditors.

You may decide in such a case to declare bankruptcy. This is a last resort, when you can no longer settle your financial responsibilities through reasonable payments spread out over a certain period of time.

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Personal Bankruptcy

La faillite personnelle est parfois nécessaire quand aucune autre option n’est possible et Poupart Syndic peut vous guider dans vos démarches pour faire une déclaration de faillite.