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Personal Bankruptcy

Bankruptcy is a legal proceeding available to a person or corporation in order to cope with a financial crisis. One of the main purposes of bankruptcy legislation is to afford the opportunity to an honest but unfortunate person hopelessly burdened with debt, to free him or herself from debt and start fresh.

About Bankruptcy

What happens during bankruptcy

Most collection actions, lawsuits and wage garnishes are suspended upon filing bankruptcy.

Your creditors will be advised to stop contacting you and to deal directly with your trustee.

In many cases, upon your discharge from bankruptcy, you are released from all debts.

Your responsibilities during bankruptcy

When you declare personal bankruptcy, one of your duties as a bankrupt will be to prepare and submit to the Trustee, a monthly budget detailing your income and expenses. You must also disclose your assets and liabilities and provide your income tax information. Please call for details.

The Superintendent of Bankruptcy provides a series of income thresholds above which you will be required to make payments to the Trustee for the benefit of your creditors. The income thresholds are determined primarily by the number of persons in your family.

Qualifying for bankruptcy

Bankruptcy is a legal process that provides the bankrupt with immediate relief from most legal actions by creditors. It is intended to provide the honest debtor with the ability to start over by eliminating most, if not all, of his or her debts.

To qualify you must:

  • Owe at least $1,000
  • Be unable to meet required payments as they come due; or
  • Own insufficient property to pay all of your debts.

Getting started with the process

Please contact us - make an appointment at one of our convenient offices in Campbell River, Courtenay, Powell River, Sechelt, or Terrace to arrange for a free, confidential initial consultation, or if more convenient, call us Toll free in BC - 1.866.317.8331

How much does it cost?

The cost of administering a bankruptcy depends on a variety of factors, including the complexity of the bankrupt’s affairs. The Superintendent of Bankruptcy regulates the fees charged by Trustees. We can tailor your fee payment schedule to meet your individual situation.

The Details

What can I keep?

The Bankruptcy and Insolvency Act exempts certain assets from seizure:

  • Household goods – $4,000
  • Tools of trade – $10,000
  • Motor vehicle – ($2,000 for family maintenance debtors) $5,000
  • Home equity – $9,000
  • Certain life insurance policies
  • Most RSP accounts
  • Plus all necessary clothing and all required medical aids (for debtor or a dependent).
  • Please contact us for details.

What about secured creditors?

In a bankruptcy, secured creditors are those creditors holding a properly registered charge over assets pledged as security for a debt. The Trustee will take possession and realize, on the behalf of the bankrupt’s estate, any equity on the pledged asset, the secured creditor will have the option of realizing on their security, or alternatively making whatever new arrangements with the debtor as is agreeable to the debtor. Often, people are able to continue with a mortgage payment or car loan and not lost the asset.

What is a Licensed Insolvency Trustee?

A Licensed Insolvency Trustee is an individual licensed by the Federal Government to administer proposals to creditors and assignments into bankruptcy. Most trustees have a university degree and an accounting designation such as a CA. After obtaining an accounting designation, another rigorous set of exams is taken in regards to insolvency matters with the final being an oral exam in front of a panel. Subsequent to becoming licensed, a bankruptcy trustee’s office is monitored by the Office of the Superintendent of Bankruptcy who regularly conducts on site reviews of operations.

Most trustees are also members of the Canadian Association of Restructuring and Insolvency Professionals and voluntarily adhere to a code of ethics set by the association.

As more businesses start to offer credit counselling services, it is important to understand the differences between credit counsellors and bankruptcy trustees. Please refer to www.bankruptcycanada.com/Credit-Counsellors.htm for a comparison.

Alternatives to Personal Bankruptcy