How Does a Person Declare Bankruptcy?

Any person who lives in Canada or does business in Canada, owes more than $1000 and is not able to pay off their debts is eligible to declare personal bankruptcy. To declare bankruptcy is to petition the Government of Canada under the Bankruptcy and Insolvency Act to permanently remove or dissolve all debts owed. This process in effect, stops all bill collectors or banks from soliciting you for sums owed. There are many conditions and stipulations not mentioned here that can affect whether the discharge of debts is completed within 9 months or 36 months.

The process begins whereby payments on debts are missed for a minimum of three months. After three months, without declaring personal bankruptcy, banks and bill collectors have a right to begin legal action to seize the debtors’ property or garnish their wages.

To stop the garnishing of wages and to keep some amount of personal or business property, the bankruptcy process must be initiated. This starts with a meeting with a Trustee in Bankruptcy.

A trustee in Bankruptcy is a person who is qualified and experienced in the implementation of the Bankruptcy and Insolvency Act and will be the go between for you and the creditors.

There is no such thing as Do It Yourself Personal Bankruptcy in Canada. A trustee in Bankruptcy must be used.

What Debts are Discharged in a Personal Bankruptcy?

Debts Discharged During Personal Bankruptcy in Canada is:-

1. Any line of Credits
2. All bank overdraft accounts
3. All credit card debts including VISA, MasterCard, American Express
4. All business overdraft accounts used for business purposes.
5. All pay day loans or other check cashing loans
6. All monies owed to any bank or financial institution.
7. Home Phone and Cellular Phone Bills
8. Utility Bills for electricity, water, and gas
9. Small Claims Court Settlements

Even though all of the above can be included in the personal bankruptcy filing, it would not be advisable to include phone bills and some of the utilities if a home or a rental unit will continue to be used as these services will be required.

What Debts are NOT Included In A Personal Bankruptcy?

1. Alimony or Child Support Payments
2. Fines instituted by a court
3. Student Loans if the course of study has been completed less than seven years from the date of bankruptcy.
4. A Car Loan (the car can be seized and sold by the trustee in bankruptcy and/or arrangements can be made with the car company to continue the monthly payments)

There are lots of little specifications on personal bankruptcy in Canada and the introduction above is not an exhaustive list of all considerations.

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