Personal bankruptcy can offer powerful debt relief for people struggling to manage overwhelming debt. Read on to learn how personal bankruptcy works in BC, and the steps involved with declaring and completing bankruptcy.
How Do Bankruptcies Work in Canada?
Personal bankruptcy in Canada is a legal solution that allows an individual to have their debts forgiven. You’ll get immediate debt relief upon declaring bankruptcy, and work through the process to receive an official discharge (i.e., release) from bankruptcy. At that time your ‘frozen’ debts will be considered forgiven and legally written-off by your creditors.
If you are struggling to meet your payments and other debt relief options are unsuitable, bankruptcy may be the best way to get your debts resolved and ultimately move forward with a financial fresh start. Some of the advantages to filing for bankruptcy can include:
- Having virtually all your debts wiped out – from credit cards to taxes, student loans to CERB overpayments, lines of credit to payday loans and more.
- Your personal bankruptcy can also include business-related debts where you are a sole proprietor or have personally guaranteed business debt.
- Protection for you and your assets, as creditors will not be permitted to ask you for payments, nor continue charging you interest or other fees.
- Collections including court action and wage garnishments also cease upon filing bankruptcy.
- Removing the burden of debt payments from your household finances.
- The cost of doing bankruptcy is generally much lower (and faster) than repaying all your debt, plus interest!
To be eligible for personal bankruptcy in Canada you need to owe at least $1,000 and be insolvent. This could mean you are not able to repay all your debts – such as when the total of what you owe exceeds the total of what you own – or where you are generally unable to pay bills as due.
Although you don’t need to ask permission from your creditors or a court to claim bankruptcy, you can’t declare bankruptcy on your own – you need to work with a Licensed Insolvency Trustee who will administer your bankruptcy and be a resource to you throughout the process.
How to File for Bankruptcy in BC
Whether you’re already confident you want to file for bankruptcy or you don’t yet know what your options are, the first thing you should do in dealing with a debt problem is connect with a local Licensed Insolvency Trustee in your province.
- Sands & Associates serves residents across BC and all our services are available in-person from the local office nearest you, or via video conference – whatever is most comfortable and convenient for you!
- You do not need any sort of referral or agent to connect you, you can simply get in touch.
3 Steps to Starting Bankruptcy
At Sands & Associates we aim to have your official debt-free plan launched in three steps, whether you move forward with personal bankruptcy, or a bankruptcy alternative like a Consumer Proposal.
You’re in control of the timeline of these steps. We understand that once you’ve made the decision to move forward with a debt solution you may want to get things moving right away:
- Sands & Associates can work with you to have your bankruptcy made official in as little as 24 hours after your consultation should you have an urgent issue.
- Absent a pressing situation, most people will move through the following three steps within a week or two.
Step 1: Have a Free Confidential Debt Consultation
You’ll speak with a non-judgmental debt help expert at Sands & Associates. Together we can discuss any specific issues you are hoping to resolve, what debts you have, your general household and income situation, and any other details relevant to your circumstances.
Licensed Insolvency Trustees and Insolvency Estate Managers are uniquely qualified to discuss all your debt management options with you and help you weigh the pros and cons of each. We’ll review “do it yourself” strategies and borrowing options, non-legal avenues, and legal solutions.
- It’s important you get information about all your options so you can make a fully informed decision before moving forward. For example:
- Many people who contact us seeking bankruptcy services find out bankruptcy is not the only solution that achieves the debt relief or protection they were seeking. More people actually choose to do Consumer Proposals to both consolidate their debt without borrowing – and have partial debt forgiveness without filing bankruptcy.
Personal bankruptcy is a federally-legislated process, with small differences to certain elements of bankruptcy depending on which province or territory you reside in.
At Sands & Associates we aim for a ‘no surprises’ experience and this consultation is key to ensuring you understand your options and get clear explanation as to how the process you choose will work for you and your unique situation.
Step 2: Collect and Review Your Financial Information
If you decide to move ahead with bankruptcy Sands & Associates will prepare the required documents for you. For us to do this you will fill out a basic information form and gather relevant documents detailing your debts, income, and assets.
- We’ll have our second meeting together to go over these materials and gather any missing details. Don’t worry if paperwork is not something you’re confident with, we’re here to help you.
After this second meeting your Licensed Insolvency Trustee or Insolvency Estate Manager will prepare your bankruptcy documents.
Step 3: Sign Your Official Bankruptcy Documents with Your Licensed Insolvency Trustee
After you’ve signed your official bankruptcy documents (in-person and virtual appointments are available for this), your bankruptcy will be registered with a branch of Industry Canada called the Office of the Superintendent of Bankruptcy. This is the government body that provides oversight of all filings Licensed Insolvency Trustees do (all proposal types, bankruptcies, etc.).
Three steps done – your personal bankruptcy is signed, filed and official, and debt relief protections are all immediately in place!
What Happens After my Bankruptcy is Filed?
In Canada personal bankruptcy is usually a straightforward and short-term financial process. You can generally expect privacy, and most people Sands & Associates works with retain all their assets and receive a discharge from bankruptcy in just nine months.
Here are some of the key things that happen during those nine months:
- Once your bankruptcy is official your Licensed Insolvency Trustee will take over communications with your creditors, sending them notice (usually electronic) of your bankruptcy.
Bankruptcy’s legal protection is effective immediately and creditors included in your bankruptcy must stop contacting you for payment, charging interest and other fees, and halt legal actions including wage garnishments, bank account freezes and other collections.
- Your debt payments should have stopped by the time you sign your official bankruptcy documents.
- Creditors cannot prevent you from seeking the shelter of bankruptcy; they can’t simply “opt out” and continue pursuing you for repayment.
- Borrowing agreements for debts tied to assets like a vehicle loan or mortgage should continue uninterrupted unless you decided not to keep these financing arrangements ongoing.
- You’ll complete a basic monthly budget form detailing your household’s income and expenses.
Using this ‘Statement of Income and Expenses’ budget, your Trustee will calculate whether your income is higher than the government’s low-income guideline. If so, you will pay what’s called ‘surplus income’.
Surplus income (or lack thereof) will determine both how long you will be ‘in bankruptcy’ and how much you pay in bankruptcy each month. Usually:
- Surplus income means a bankruptcy term of 21 months
- No surplus income means a bankruptcy term of 9 months
- Make regular payments to your Trustee for the cost of your bankruptcy (or surplus income).
Most people who anticipate having surplus income choose to do Consumer Proposals instead of bankruptcy, as they are often confident in being able to afford repaying a portion of their debt.
- Stay in touch with your Trustee and fulfill other key commitments to receive your discharge from bankruptcy. These generally include:
- Completing two private financial counselling sessions one-on-one with a Qualified Insolvency Counsellor from Sands & Associates.
- These 45-minute sessions focus on resources to boost financial skills like budgeting, saving and credit building. If there are any other financial areas you want to focus on, we’ll offer additional support wherever possible.
- Supplying your Trustee with the information and documents needed to file your taxes for the year your bankruptcy starts. We’ll file tax returns required for the year of your bankruptcy, and help you get caught up on returns that might be outstanding too.
Your Licensed Insolvency Trustee or Estate Manager is here for you throughout the bankruptcy process, start to finish. We want you to have a stress-free experience and exit bankruptcy in the shortest time possible to get your financial fresh start and move forward with your life, debt-free.
Recap the Basic Timeline for Most Bankruptcies
Depending on your situation, you could be totally debt-free in as little as nine months after your debt consultation with Sands & Associates:
- Have a consultation, gather your financial information, then sign your bankruptcy documents – and stop making your regular debt payments
- Over the next nine months work through the bankruptcy process
- Once all your duties are complete and nine months passed, you’ll receive an official Certificate of Discharge, and your unpaid debts will be considered forgiven and legally written-off by your creditors
Learn More About Bankruptcy and Other Options for Debt Forgiveness
We understand no one wants to be in a position where they are considering bankruptcy, and we believe our supportive non-judgmental approach to debt help allows our clients to move forward with dignity, confidence and hope for the future.
In less than an hour we can help you explore your options, including but not limited to personal bankruptcy, and provide you with a plan to deal with your debt for good.
Choose the debt-free plan that’s right for you. Sands & Associates’ caring non-judgmental debt experts are here to help you – book your free confidential debt consultation today.