Occasionally bankruptcy is your only option.
A Bankruptcy should be considered only when there are no “other options” available. Over 80,000 Canadians filed for Bankruptcy in 2011. The Bankruptcy process is a formal form of restructuring and is filed under the Bankruptcy and Insolvency Act.
A Bankruptcy (depending on your surplus income) for a first time Bankrupt is up to 21 months and up to 36 months for a 2nd time bankrupt. Alternatively, you can file as many Consumer Proposals as you want without having more severe consequences for the insolvencies.
- You are required to fill out monthly income and expense reports during your Bankruptcy
- You are required to attend two counseling sessions
- You cannot be a Director of an incorporated company
- You may lose income tax refunds during your bankruptcy
- You will not receive any GST /HST quarterly cheques during your Bankruptcy
- You cannot obtain any credit as an un-discharged Bankrupt
- The Bankruptcy remains on your credit rating for 7 years at an R9
- Most wage garnishments cease immediately
- Collection agencies can no longer contact you
Through this process a bankrupt is required to give full disclosure of all their assets, liabilities, income and expenses as well as any business holdings as part of the process.
- You must be insolvent to file a Bankruptcy (debts are more than assets)
- You cannot pick and choose the debts that are included
- You cannot eliminate support or alimony obligation
- You cannot eliminate student loans under 7 years
- You cannot include secured debts such as mortgage and car loans
- You are allowed to keep certain assets based on Provincial legislation