What is Bankruptcy?
In Canada, bankruptcy is the legal process of clearing debts that cannot be paid when owed by surrendering non-exempt assets to a Licensed Insolvency Trustee.
Filing bankruptcy means that creditors are prevented from contacting or taking legal action against a debtor. Once discharged from bankruptcy, you are relieved from debt and able to move forward with your life. There are various advantages of filing bankruptcy, and most often it is for a fresh financial start. It is best to work with a trusted bankruptcy firm like Spergel to walk you through each stage of the process.
How do you file bankruptcy?
Only a Licensed Insolvency Trustee is able to file the paperwork for a bankruptcy in Canada. Once you have discovered a debt solutions team that truly understands your financial situation, the first step is to meet with a trustee to discuss the best pathway for you. They may consider bankruptcy alternatives like debt consolidation or consumer proposal. If you meet the eligibility criteria for bankruptcy and it is the most sensible option, your Trustee will prepare to file for bankruptcy.
How does bankruptcy work?
Unlike other Canadian bankruptcy firms, you will receive a single point of contact at Spergel to walk you through the entire bankruptcy process. Initially, your Licensed Insolvency Trustee will contact the Office of the Superintendent of Bankruptcy, which will inform the credit bureaus of your bankruptcy. Your trustee will then contact each of your creditors to enable them to file a claim. They will also file any outstanding tax returns up until the date of the bankruptcy. When the bankruptcy is finalized, these debts will no longer be required, and any non-exempt assets and tax funds will go to your trustee to pay off creditors. You are able to hold on to a number of assets including your car and house, depending on your circumstances and province.
When does bankruptcy clear debts?
Bankruptcy is complete when a Notice of Discharge is received from your Trustee. It means that from this point forward you are free of the unsecured debts included in your bankruptcy. It is from here that you are able to make a fresh financial start, and to rebuild your credit without the stresses of unmanageable debt. If it is your first time filing bankruptcy and there is no surplus income, discharge will happen after nine months, otherwise it will take a little longer before you can begin life after bankruptcy.
What is a stay of proceedings?
A stay of proceedings is in place immediately once bankruptcy is filed by your Licensed Insolvency Trustee. This is often one of the most relieving aspects of the bankruptcy process for many debtors. It means that unsecured creditors can no longer contact you, harass you, pursue lawsuits, or continue wage garnishment. It is important to note that this does not apply to secured creditors including mortgage lenders, who are able to seize assets if monthly payments are not met. Learn more about the debts covered by bankruptcy.
What are my bankruptcy obligations?
During the process of bankruptcy, you have an obligation to meet some requirements including meeting creditors if required. You will also need to send your Trustee proof of income each month, as well as making monthly payments to them should there be any surplus income. As part of the bankruptcy process, you must also attend two credit counselling sessions, where you will learn valuable skills about money management and budgeting.
Is insolvency and bankruptcy the same thing?
Although insolvency and bankruptcy are closely associated, they mean different things. Insolvency is a financial situation where a debtor is unable to pay their debts to creditors on time. Bankruptcy is the legal procedure to clear these debts by assigning a debtor’s non-exempt assets to a Licensed Insolvency Trustee as part of repayment. Learn more about the circumstances around your assets during bankruptcy.
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As a leading bankruptcy trustee firm in Ontario, Spergel offers a compassionate and personal approach to filing bankruptcy. While it can seem daunting, our Licensed Insolvency Trustees have helped over 100,000 individuals reclaim their lives, free from past debt. Book your free consultation today.