Bankruptcy is a legal proceeding that is available to you in order to resolve your debts. One of the main purposes of bankruptcy legislation is to provide you with the opportunity to free yourself from an unmanageable debt load and start fresh – “a new lease on life.”
In order to go into bankruptcy, you must be insolvent. To be insolvent means to:
- Owe at least $1,000;
- Not be able to meet your regular payments as they are due to be paid.
As outlined in the graphic at left, if you have never been bankrupt before, your bankruptcy will likely run for a term of either 9 months or 21 months depending on your income and household size.
Our Personal Bankruptcy Calculator can be used to estimate the cost and term of your bankruptcy.
If you determine that Personal Bankruptcy is the best option for you, you will have a number of key duties that must be performed over the term of the bankruptcy in order to receive a discharge from your debts. These include:
Report your income each month
You must provide the trustee with monthly reports of your household income and living expenses and inform the trustee of any changes in your family situation
Attend two mandatory counselling sessions at our offices
You are required to attend two counselling sessions in order to be eligible for a discharge from bankruptcy
The sessions are usually one-on-one and deal with budgeting, financial planning, the causes of your bankruptcy and any other issues
The first financial counselling session must be held between 10 and 60 days following the date of bankruptcy; the second session must be held no later than 210 days following the date of bankruptcy
Assist the Trustee in the administration of your estate
Keep the trustee informed of your current address
Co-operate with the Trustee’s requests for assistance and information
If required, attend a meeting of creditors, which is not normally held unless requested by the Superintendent of Bankruptcy or by creditors holding at least 25% of your debts
Provide information for filing of tax returns
Two tax returns are filed for the year of the bankruptcy – a ‘pre-bankruptcy’ return from Jan 1 to the date of bankruptcy, and a ‘post-bankruptcy’ return from the date of bankruptcy to Dec 31
The trustee normally files these returns when provided with the information
Any prior year’s, pre-bankruptcy and post-bankruptcy tax refunds are the property of the Trustee for the benefit of the creditors