How Does Bankruptcy Work In Canada?
Steps You need To Take Before Filing For Bankruptcy In Canada
If you’re considering filing for bankruptcy in Canada, you need to contact a Licensed Insolvency Trustee. Here is how the process of filing for bankruptcy goes:
- During your consultation, the trustee reviews your liabilities (debts), income, and assets, to check if you are insolvent. If your total debt exceeds the value of your assets and you can’t make the monthly payments for your debt, you can file for bankruptcy.
- The trustee will then review and compare all the options that could help you deal with your debts, including bankruptcy and other alternatives.
- Then, you will sign the paperwork your trustee needs to file your personal bankruptcy with the Office of Superintendent of Bankruptcy.
- Your trustee will submit your paperwork within five days.
- Your creditor protection starts.
Filing for bankruptcy in Canada involves some short and long term effects. Remolino and Associates can help you see beyond your debt.
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Steps You Need To Take During The Bankruptcy Process In Canada
- Most of your unsecured debts – tax debt, payday loans, personal loans, lines of credit, and credit cards credit will be cleared. Your student loans might also be cleared if you’ve been out of school for more than seven years.
- Some financial obligations, such as spousal or child support payments, as well as payments for other court judgments, will continue.
- Some of your assets may be liquidated. Assets that are not exempt may be sold and the proceeds will go to your creditors.
- You will have to show your trustee your tax documents and pay stubs each month to prove your income.
- Make monthly payments if you have surplus income.
- You may have to attend a meeting of your creditors (only in unusual circumstances).
- You may have to attend two credit counseling meetings so you can learn about budgeting and improve your money management skills.
Steps You Need To Take After The Bankruptcy Process In Canada
You may be eligible to be discharged from your bankruptcy in as few as nine months if you’ve never been bankrupt before and you have no surplus income. Otherwise, your bankruptcy can last longer.
Your bankruptcy will show on your credit report for six years after being discharged if it was your first bankruptcy and for 14 years if it was your second. This may affect your ability to get credit.
However, you can take steps to rebuild your credit score.