Bankruptcy

Questions and Answers

Bankruptcy FAQ

These questions and answers provide a brief summary of the most common questions asked. However, these questions do not address all the issues that may be applicable to your specific situation. Further questions can be answered by contacting Paul J. Pickering and Associates Limited, Licensed Insolvency Trustee.

To file for bankruptcy, you will need the services of a Licensed Insolvency Trustee. The Trustee will review your financial situation with you, prepare the documents you need to file for bankruptcy and offer you financial counselling to help you manage your finances effectively in the future.

The Bankruptcy and Insolvency Act sets out whether a bankruptcy notice has to be published in the newspaper. Usually, a consumer bankruptcy notice will not be published.

Some of your duties include:

  • advising the Trustee of all your assets and debts
  • giving all your credit cards to the Trustee
  • attending meetings as required
  • keeping the Trustee advised of any material changes in your address, income, employment, and family responsibilities until your discharge

If at least 25% of your creditors request a meeting with you, you will be required to meet with your creditors. This meeting is usually held in the Trustee’s office. You also may be required to meet with an Official Receiver who is employed by the federal government. In order to obtain your discharge from bankruptcy, you will also have to attend two financial counselling sessions.

If this is the first time you are filing for bankruptcy and there is no opposition to your discharge, you will be eligible for an automatic discharge from bankruptcy either nine months after the date of bankruptcy or twenty-one months after the date of your bankruptcy if you have surplus income to contribute. If you have previously declared bankruptcy, your automatic discharge will be either twenty-four of thirty-six months after the date of your bankruptcy.

No. The Bankruptcy and Insolvency Act and provincial legislation may allow you to retain the following assets:

  • household furniture and appliances
  • tools required for your work
  • your automobile, if it is under specified value
  • certain life insurance policies, RRSP’S and pensions

Bankruptcy does not prevent a secured creditor from taking back assets that have been specifically pledged as collateral for a loan.

Immediately. Your unsecured creditors (to whom you have not pledged specific asset) can do nothing to collect their accounts after you have filed for bankruptcy. If your wages are presently being garnisheed, your bankruptcy will, in most cases, stop the garnishee.

Shortly after you have signed the bankruptcy documents the Trustee will contact your creditors advising them of your bankruptcy. If creditors contact you between the time you file for bankruptcy and the time they are notified of the bankruptcy, you should refer them to the Trustee.

Yes. Your bankruptcy will be recorded with the credit reporting agencies. Your credit report will list your first bankruptcy for 6 years after your discharge date. If it is your second bankruptcy or more, it will be listed for your credit report for 14 years after your discharge date.

Bankruptcy eliminates most debts. However, the following obligations will remain after you are discharged from bankruptcy:

  • court imposed fines, penalties, and restitution orders
  • awards by a civil court for bodily harm, sexual assault or wrongful death
  • alimony and child support
  • debts arising from fraud, embezzlement, misappropriation while acting in a fiduciary capacity
  • debt or liability for property obtained by false pretences or fraudulent misrepresentation
  • depending on time out of school, student loans may not be discharged or compromised

Under certain conditions student loans may remain after your bankruptcy.

The cost for administering a bankruptcy is paid from your existing assets. (An income tax refund is an example of an asset). You may be required to make monthly payments to the Trustee depending on your income and expenses. If you have no assets or surplus income, you can make other arrangements with the Trustee.

Since bankruptcy is allowing you a fresh start, the Trustee will help you with financial counselling so that you can better manage your money in the future.

No. Depending on your particular situation, other alternatives may be more appropriate. These options include:

  • a proposal to your creditors
  • financial counselling
  • a debt consolidation loan

All the options will be discussed in detail when you meet the Trustee.

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