This is a legal process that relieves you of most of your debts. It allows an honest person who has fallen on hard times, the ability to get a fresh start. The biggest misconception about Bankruptcy is that you lose everything. THIS IS SIMPLY NOT TRUE!
The second misconception of Bankruptcy is that someone else is paying off your debts. THIS IS ALSO NOT TRUE! The creditors are writing off your debt. Creditors charge high interest rates for credit cards and unsecured lines of credit to help them absorb this and other types of losses.
Bankruptcy is administered by an Insolvency Trustee, who is licensed by the Office of the Superintendent of Bankruptcy, an agency of Industry Canada, a department of the Federal Government. The Superintendent monitors the actions of the Trustee to ensure the process is being administered properly.
Bankruptcy is usually the last resort and for some it is the only choice left. It is a voluntary process 99% of the time. Once you realize that you are insolvent (you have more debt than you can pay as they become due or lack the assets to cover this may be your only option.
If you are concerned about your debt situation, a free confidential consultation with a us will outline the available options. Although you may be under a lot of pressure from creditors, the Trustee’s primary focus is to educate and inform you of the different processes. Once you have learned about the options, you will decide which one is best for you and your family. A Trustee should not pressure you into making a decision on the spot as careful thought and consideration is required. If you are feeling pressured by a Trustee, perhaps you need to meet with another Trustee for a second opinion or a different approach.
Once the decision is made to go Bankrupt, there is a tremendous sense of relief as you can move forward and start rebuilding your finances and your life.
If this is the first time you have filed for bankruptcy the duration of the process is a minimum nine months, however it may be 21 months in duration if you have surplus income, as determined by the Superintendent of Bankruptcy. You are entitled to a discharge from bankruptcy at the end of the process provided you have complied with your duites as set out in the Act.
If this is your second bankruptcy, the length of the bankruptcy is 24 months minimum and will be 36 months, if you have surplus income. If this is a third or fourth bankruptcy, you will be required to attend Court for a discharge hearing.
Bankruptcy is not a selective process, therefore, you must include all unsecured debts. You can not pick and choose.
- Protects you from your unsecured creditors.
- Relieves stress and anxiety.
- Is the least expensive option.
- You will receive credit counseling in order to learn from the experience.
- Stops most garnishees and collection proceedings including Canada Revenue Agency (The exception once again is secured creditors; if you failed to make those payments they can still repossess the collateral pledged ie: your vehicle.)
- Gives you immediate relief from collectors.
- If your utilities are being disconnected, they can be restored once you have filed for bankruptcy.
- You are required to record your income and expenses during the period as part of the learning and budgeting process.
- If your situation improves, the Bankruptcy can be converted to a Proposal during the process and remove the Bankruptcy from your record.
- Allows you to surrender a leased or purchased vehicle without paying for the remainder of the contract (the shortfall).
- You will stop paying all of the unsecured creditors so that you feel immediate financial relief.
- It will hurt your credit rating but in most cases the damage is already done.
- All credit cards must be surrendered.
- You may be required to obtain a new bank account.
- You cannot be the director of a corporation.
- There are some restrictions on self employed people.
- It will remain on your credit report for 6 years after your discharge in a first time bankruptcy and 14 years after discharge for second and subsequent filings.
- You can not change your mind or cancel a bankruptcy. Once you sign the papers and they are submitted to the government for registration you become bankrupt and you must comply with the Act to receive your discharge from bankruptcy.