Bankruptcy

• You must owe at least $1000.00 and be insolvent.
   
• Wage garnishments from civil judgements or Canada Revenue Agency will be stayed immediately.
   
• Most debts, including many of those to Canada Revenue Agency, are debts that are discharged by a bankruptcy. Some debts, like child support payments, court fines, debts arising from fraud and student loans less than ten years old, survive the bankruptcy process.
   
• For a first time bankrupt, an automatic discharge occurs after nine months if no 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. The Court will then issue a discharge order that may result in a suspension of the discharge, or other conditions that need to be met prior to a discharge being issued
   
• Duties of a bankrupt include: advising Trustee of all assets and liabilities, attending two credit counselling sessions, inform Trustee of income changes, ensure your correct mailing address is provided at all times, and attend any meetings that may be called in the bankruptcy
   
• You will not lose everything. In Ontario certain assets are exempt from seizure, including:
  1. Household goods up to $11,300.00
  2. Clothing up to $5,650.00
  3. Tools of Trade up to $11,300.00
  4. Motor Vehicle up to $5,650.00
  5. Farmers up to $28,300.00
  6. Most life insurance policies
  7. Pensions
  8. Some RRSP's
  
  
• 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. If the tax return for the year prior to bankruptcy has not been filed, the trustee is required to submit this return as well. 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.
   
• Please contact us for further information on Bankruptcy, or to set up a meeting to discuss your options.