Bankruptcy pursuant to the law on bankruptcy and insolvency
Under the provisions of the Bankruptcy and Insolvency Act, an insolvent debtor has the right to declare bankruptcy.
The debtor must fill out the necessary forms at a trustee’s office to set the bankruptcy in motion.
Once the bankruptcy is filed, all the creditors are notified by the trustee and must immediately stay all procedurs against the debtor, whether it involves civil action, seizures etc.
In the case of a first bankruptcy, the debtor has the right to automatic release at the end of nine (9) months providing the creditors do not oppose. If said debtor wishes a release in less than nine (9) months, or the creditors are opposed, it then falls into the hands of the court.
This release frees the debtor from debt, except for the following :
- Debts of a criminal nature (speeding ticket)
- Debts arising from fraud
- Debts accumulated by the acquisition of goods under false declaration. Example : ( obtaining a loan by knowingly declaring collateral that does not belong to you).
An insolvent debtor is by definition, a person who:
- Owes at least $1000 to creditors;
- Cannot meet their obligations on time.
Throughout the bankruptcy, the debtor is obliged to pay by voluntary deposit, based on net salary and personal and family obligations.
The debtor must also submit all seizable assets to the tustee for the benefit of the creditors, with these exceptions.
- Personal belongings
- Furniture and furnishings
- Automobile, if needed for work or of little value.
- All work related material.
What to expect if you file for bankruptcy
After talking with a Licensed Insolvency Trustee, you decide that bankruptcy is the most appropriate option to handle your debts. The trustee explains the way your creditors will be paid and what you will need to do during the bankruptcy process.
Costs and how long in bankruptcy
Understanding the bankruptcy discharge
You decide to file for bankruptcy. Your Licensed Insolvency Trustee outlines what debts will be discharged in a bankruptcy and how long the process takes.
Informative video: Government of Canada