Bankruptcy
- You must owe at least $1000.00 and be insolvent.
- Wage garnishments from civil judgements or Canada Revenue Agency will be stayed immediately.
- A bankruptcy will relieve you of all debts owing at the filing of your documents except those under Section 178 of the Bankruptcy and Insolvency Act as follows:
- 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 an undisclosed creditor; and
- student loans if less than seven years from completion of your studies.
- For a first time bankrupt, an automatic discharge occurs after nine months or 21 months (depending on income), if no oppositions have been filed and all duties have been fulfilled. For a second time bankrupt, an automatic discharge occurs after 24 or 36 months (depending on income) if not oppositions have been filed and all duties have been fulfilled. For all other bankrupts the trustee will arrange for the discharge application to be heard by the Court.
- Duties of a bankrupt include: advising Trustee of all assets and liabilities, attending two credit counselling sessions, submitting monthly budget forms, ensuring your correct mailing address is provided at all times, assisting the Trustee with the realization of your assets and attending any meetings that may be called in the bankruptcy.
- You will not lose everything. In Ontario certain assets are exempt from seizure, including:
- Household goods up to $11,300.00
- Clothing and personal effects up to $5,650.00
- Tools of Trade up to $11,300.00
- Motor Vehicle up to $5,650.00
- Farmland up to $28,300.00
- Most life insurance policies
- All RRSP's, other than contributions made in the last 12 months
- If you are leasing or have a loan secured against your vehicle, you may be able to keep the vehicle after making arrangements with the trustee and the creditor to continue payments and contribute any equity over the loan amount to your bankruptcy estate. In certain circumstances you may be able to keep your house, depending on the amount of available equity. You must keep your mortgage payments, taxes and utilities in good standing if you keep your home.
- Two income tax returns must be completed for the calendar year in which you become bankrupt. The pre-bankruptcy return covers the period from the beginning of the year to the date of your bankruptcy. You will be required to provide your trustee with details and documentation to support income and deductions on this return. The post-bankruptcy return covers the period from the date of bankruptcy to the end of the calendar year. Any refunds will go to your estate to be distributed among your creditors. Any amounts owing on prior year returns and pre-bankruptcy return are debts that are discharged by the bankruptcy.
- Surplus Income: The Superintendent of Bankruptcy has set a minimum level of income that is required to survive. If your family income exceeds this level, you may be required to make monthly payments to the Trustee for the benefit of your creditors.
Please contact us for further information on Bankruptcy, or to book a free consultation to discuss your options.
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