Don’t worry
the last solution is Personal Bankruptcy

Personal bankruptcy should be the last choice amongst debt relief solutions. There are several other solutions to debt problems, such as a consumer proposal and debt consolidation. Licensed insolvency trustee, Marc Nantel will be able to evaluate your best solution according to your situation.

The duration of a first bankruptcy is 9 months if you do not have surplus income and 21 months if you have surplus income. If you are in your second bankruptcy, the duration increases to 24 months if you do not have surplus income and to 36 months if you have surplus income. The bankruptcy process could be longer if you do not fulfill some of your obligations or if one of your creditors opposes your discharge. You will then need to obtain an absolute discharge order from the court.

The amount a person has to contribute in a bankruptcy varies based on the individuals’ net revenues (or his family’s net revenues). If you are considered to have a surplus income, you will have to contribute 50% of the amount of the surplus during the period mentioned above. If you do not have any surplus income, you will have to pay an amount as agreed to with the licensed insolvency trustee to cover the cost of the bankruptcy.

The surplus income is the amount of a family’s net revenues exceeding the minimum amount of revenues required to maintain a reasonable standard of living. The minimum amounts are established by the Superintendent of Bankruptcy of Canada based on the number of people in a household and are updated annually to consider inflation. To know more about the surplus income concept and its calculation for your specific situation, we invite you to contact us.

If you file for personal bankruptcy, you may be able to keep your vehicle if: the vehicle is exempt of seizure according to the provincial exemption allowed; the vehicle has a small realizable value and the individual agrees to pay a compensatory amount to the licensed insolvency trustee; the vehicle is financed and the individual continues to honor their payment obligations to the lender or the lessor.

If you file for personal bankruptcy, your seizable assets are transferred to the estate of your bankruptcy to be sold by the licensed insolvency trustee in order to pay off part of your debts. If you have significant equity in your house, the consumer proposal is likely a better solution. If you recently acquired the property and there is likely no equity in the house, you may be able to keep your house as long as you continue your mortgage payments. It is preferable to consult us regarding this matter, as each situation is unique.

Usually, only contributions to your RRSP made in the 12-month period prior to your bankruptcy can be seized. There can be some exceptions. We will discuss this with you when reviewing your situation.

If the debtor disagrees with the amount of surplus income to be paid, there can be a mediation process. If the mediation fails, a request for a hearing will be required for the court to render a discharge judgment.

Declaring bankruptcy significantly affects your credit, but it is possible to rebuild it. First of all, know that there are two main credit bureaus, Equifax and TransUnion. When the bankruptcy is filed, the Office of the Superintendent of Bankruptcy will forward the information to these two credit bureaus so that the bankruptcy is on your file.

First bankruptcies will remain posted at Equifax’s credit bureau for 6 years from the date of your bankruptcy’s discharge, while it will remain posted for 7 years at TransUnion. Second bankruptcies show for a period of 14 years following your discharge from bankruptcy.