Be debt free in as little as 9 months!

Bankruptcy

Bankruptcy is a legal process that is designed to help you eliminate your debts when you are unable to repay them. At the end of the process, your debts are discharged (a fancy way of saying that the debts are wiped out). You are given a fresh start! It is often known as the final solution when dealing with your debt problems, but it may be the best solution when you have no chance of repaying your debt.

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WHO CAN FILE?

You must be insolvent (this is a fancy way of really saying that you are unable to pay your debts as they come due).
You owe at least $1,000.00.
You do not have enough income to fund the monthly payments of a consumer proposal.

IS Bankruptcy RIGHT FOR ME?

Advantages

  • It is often the quickest and least expensive way to wipe out your debts.
  • The process can be completed in as little as 9 months.
  • Can include income tax debts.
  • Can keep your car, tools and your personal belongings (up to exemption limits).
  • Unlike in a consumer proposal, you do not need your creditor’s approval.

Disadvantages

  • It results in the lowest credit score (an R9) and stays on your credit report for at least 7 years after discharge.
  • If your monthly income is over the government guideline, the cost and length of the bankruptcy is increased.
  • In some instances, not all debts are wiped out.
  • Not all assets that you own are exempt.

How much does a bankruptcy cost?

The cost of a bankruptcy is not straightforward and can differ from person to person depending on each person’s individual situation. There are three main factors that impact the “cost” of a bankruptcy:

  • The (net) monthly income of the person.
  • The size of the person’s family.
  • What assets (if any) that person owns.

To get a better understanding of how much bankruptcy may cost you, please contact us for a free, no-obligation consultation.

FAQ

  • What is a bankruptcy?

    A legal process designed to relieve an honest but unfortunate debtor of their debts.

  • Who can file for bankruptcy

    In Canada, in order to be able to file for bankruptcy, you must meet certain conditions. The
    conditions are:

    • You must be insolvent (this is a fancy way of really saying that you are unable to pay your
      debts as they come due)
    • You owe at least $1,000.00
    • The value of your assets (if any) is less than the value of your debts (the money that owe to
      your creditors).
  • How much does bankruptcy cost?

    The cost of a bankruptcy can differ person to person depending on each person’s individual situation. There are three main factors that impact the “cost” of a bankruptcy. They are:

    • The (net) monthly income of the person
    • The size of the person’s family
    • What assets (if any) that person owns.
  • What debts do not get wiped out (“discharged”) in a bankruptcy?

    Some of the more comment types of debts that are not wiped out are:

    • Court fines, penalties and restitution orders;
    • Payments for alimony or child support;
    • Student loans, if you file your bankruptcy less than seven years after you cease to be a
      student;
    • Any debt or liability for obtaining property under false pretenses or fraudulent
      misrepresentation;
    • A debt or liability arising out of fraud, embezzlement, misappropriation or misconduct while
      acting in a fiduciary capacity;
    • Debts not disclosed to a trustee.
  • What is an R9 credit rating?

    The letter R means revolving and the 9 means a “bad debt, written off”.

    • So a R9 credit score is a credit card, line of credit, store card or some other form of revolving
      credit that is in default;
    • If a payment has not been made for 6 months, your individual rating for that debt will become
      an R9; and
    • R9 can also mean an account that has been placed for collection; moved without giving a
      new address or bankruptcy.
  • What do I get to keep during bankruptcy, if anything?

    The following items are exempt, which means that the Trustee and your creditors are not permitted to take them:

    • Necessary clothing
    • One motor vehicle worth up to $6,600
    • Furniture and appliances worth up to $13,150
    • Tools of the trade (equipment you use to earn a living) worth up to $11,300
    • Certain types of life insurance
    • RRSP (contributions made to your RRSP in the 12 months prior to the date of bankruptcy will be recovered for the benefit of the estate)
  • How long does bankruptcy stay on my credit report?

    Your first bankruptcy will remain on your credit report for six years after discharge. Your second bankruptcy will remain on your credit report for 14 years.

  • Will my family be responsible for my debts if I go bankrupt?

    Filing for bankruptcy will not have an effect on your family or their credit rating. However, it will not remove the obligation of anyone who has guaranteed or co-signed any loans or anyone you have a joint account with. Any guarantors/co-signors will still be responsible for the debts less any payments the creditor received from the bankruptcy.