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Bankruptcy FAQ

  1. What are some warning signs of financial difficulty?
    • Spending more than 20% of net income on consumer debt repayment is a sign of financial difficulty. For example, if your take home pay is $1200.00 per month and you are paying more than $240.00 per month in debt repayment, you may be facing financial difficulty.
    • Using credit card cash advances for day-to-day expenses and necessities.
    • Only being able to pay minimum payments on credit card balances each month.
    • Using paycheque advancing companies frequently (eg. Payday loans, Money Mart)
    • Having difficulty paying your monthly bills regularly and on time.
    • Using overdraft most months.
    • Collection agencies are calling you.
    • Your wages are being garnished.
    • Assets have been repossessed.
    • Utilities have been cut off.
    • You are being sued for your debts.
    • You can't afford to repair/maintain your home.
  2. How can I stop a wage garnishment?
    • Talk to you creditors directly and try to negotiate an arrangement with them
    • File a Consumer Proposal to stop the action
    • File for bankruptcy
  3. If I file for bankruptcy or a proposal, who will know?
    • If you have minimal assets, your creditors are notified by mail only. However, all bankruptcy filings are public and the general public may access the documents. In a bankruptcy where there are significant assets, a notice is placed in the newspaper notifying creditors of the date of the meeting of creditors. From the documents filed with the Superintendent of Bankruptcy, the Credit Bureau is notified and the bankruptcy is recorded and will remain on your credit record for approximately seven to 14 years from the date of your discharge.
  4. Do I lose all my property in a bankruptcy?
    • No. In Ontario, a bankrupt is able to keep the following property:
      • Household furniture up to liquidation value of $11,300.00
      • Clothing and personal effects up to $5,650.00
      • Tools of trade up to $11,300.00
      • A vehicle up to $5,650.00
      • Pensions
      • Life insurance policies with specific designated beneficiaries
      • RRSP's (except contributions made in the twelve months before the date of bankruptcy)
  5. Will bankruptcy eliminate all my debts?
    • The following debts survive a bankruptcy, meaning you will still have to pay the creditor after your discharge:
      • fines or penalties imposed by a court;
      • award of damage with respect to intentional bodily harm, sexual assault or wrongful death;
      • debt for alimony, child support or maintenance;
      • debts arising from illegal activity such as fraud, embezzlement, misappropriation;
      • fraudulent misrepresentation;
      • false pretenses;
      • dividend for creditors not disclosed to the trustee; and
      • Student loan debts where you have attended school within the last seven years.
    • Also, bankruptcy does not generally interfere with validly secured debts (e.g. a mortgage or vehicle lease).
  6. How much does it cost to file for bankruptcy?
    • The amount you are required to pay will depend upon your particular circumstances. The Trustee will explain the amount you are required to pay once your situation has been assessed. In most circumstances the Trustee's fees for bankruptcy are set by government regulations. Our firm will allow you to pay these fees over time.
  7. How long am I bankrupt?
    • For a first time bankrupt, an automatic discharge occurs after nine months if there are no surplus income requirements or 21 months if you are required to make surplus income payments.
    • For a second time bankrupt, discharge occurs after 24 months if there are no surplus income obligations and 36 months if you are required to make surplus payments based on your monthly family income.
    • An opposition to your discharge by a creditor, or failure to comply with duties will delay the above time frames.
  8. How is my credit rating affected?
    • A bankruptcy will remain on your credit rating for 7 years from discharge for a first time bankruptcy and 14 years for a second time bankruptcy. A consumer proposal will stay on your credit rating for 3 years from completion of the proposal.