Bankruptcy in Canada
Bankruptcy In Canada: What Does It Mean to go Bankrupt in Canada?
A person in Canada can go bankrupt when they consistently receive less income than expenditures. On a monthly basis, there are more expenditures than all forms of combined income, and therefore a person or family will be severely impoverished if they continued to live with such a negative net income.
In such cases, a person can file for bankruptcy in Canada and petition the government of Canada to remove their debts. This can ensure a fresh start, however it does come with many disadvantages that will last approximately 6 to 7 years.
A person can consider bankruptcy in Canada if their wages are being garnished as well, or creditors have begin to legally seize their assets.
Bankruptcy in Canada: Bankruptcy and Insolvency Act
The process by which a person goes bankrupt in Canada is defined in the bankruptcy and insolvency act which governs all bankruptcy proceedings in all provinces and territories in Canada.
Under this Bankruptcy And Insolvency Act, a person can petition the government of Canada through a bankruptcy trustee to remove all or a portion of their debts. This can have the effect of stopping all debt collection actions, the complete removal of all debts, or the partial removal of some of the debt. The Bankruptcy And Insolvency Act specifies the functions and duties of a bankruptcy trustee, the duties of the pending bankrupt, the communications between the trustee and the creditors, and the amount that the bankrupt will have to pay to the trustee for their services through this entire process.
Bankruptcy in Canada: Bankruptcy Trustee in Canada
There is no such thing as a do-it-yourself bankruptcy in Canada. A person who is contemplating going bankrupt in Canada must use the services of a bankruptcy trustee to complete the process. This bankruptcy trustee is licensed by the government of Canada, and must past exams and have previous training in all aspects of bankruptcy in Canada before they are allowed to practice in this field.
All bankruptcy trustees are bound by a code of ethics as per other professions. Should any of them violate this code of ethics there is a review board that can penalize or suspend a trustee from their duties if a violation of the code or the Bankruptcy And Insolvency Act is found.
Bankruptcy in Canada: Alternatives to Bankruptcy
While a full bankruptcy in Canada may be an option for some people, there are a few other options that can be considered as well. A lesser bankruptcy is referred to as a consumer proposal and this will allow a person to repay a portion of their debts over a period of 3 to 5 years, while maintaining one credit card. Also, this is perfect if a job depends on a no bankruptcy filing procedure.
The consumer proposal may also be using the event that there are assets that the the debtor would like to keep.
A not so common alternative is debt consolidation. For this refers to using the equity in some asset like a house or a cottage, and that equity can be mortgaged and that equity be used to pay off any other debts. This essentially turns all unsecured debts into secured debts.