Bankruptcy in British Columbia

What Does Bankruptcy Mean?

Bankruptcy is a legal debt remedy available to you to resolve your debts and achieve a financial fresh start. Bankruptcy gives you the ability to eliminate virtually all debts working closely with a Licensed Insolvency Trustee. The option and decision to file for personal bankruptcy is yours – no creditor or other party can prevent you from seeking the protection of Canadian personal bankruptcy legislation if you are struggling to repay your debts.

To file for personal bankruptcy in Canada, you will need to work with a Licensed Insolvency Trustee (“LIT”) – formerly known as a Trustee in Bankruptcy or Bankruptcy Trustee. LITs are the only debt help professionals designated and authorized to administer the bankruptcy process. You do not need to hire a bankruptcy lawyer to file personal bankruptcy in British Columbia.

Licensed Insolvency Trustees are licensed and regulated by the Office of the Superintendent of Bankruptcy. Licensed Insolvency Trustees’ responsibilities as dedicated debt experts include administering Consumer Proposals and personal bankruptcies, and ensuring your rights under federal legislation are upheld.

If you are facing financial difficulty, please know that you are not alone! For over 30 years, Sands & Associates has helped tens of thousands of BC residents by providing legally supervised debt relief services and helping them achieve a financial fresh start and debt-free future. We understand that it can be overwhelming to try to manage debts on your own, and that taking the first vital step of asking for help can be difficult – we are here for you, without judgment.

Some Advantages of Filing Personal Bankruptcy:

• Get forgiveness for nearly all types of debts including credit card debt, overdrafts, tax debt, ICBC debt, payday loans, student loans and more.
• Protect assets and income that may otherwise be vulnerable to seizure by creditors.
• Stop the debt-stress from never-ending balances owing, overwhelming payments or collection actions.
• Have a clear “debt-free date”.
• Get a financial fresh start that will help you to meet your future financial goals.
• The cost of filing bankruptcy is usually substantially less than repaying your debts in full on a monthly basis.

If you are struggling with how to get out of debt, please know that you are not alone – real debt solutions do exist and you deserve the opportunity to live debt-free.

Compare key debt help services

Looking for something specific? Check our FAQs sections for commonly asked questions about Consumer Proposals, Personal Bankruptcy, and Debt Help in BC.

How Bankruptcies Work | How Do I Declare Bankruptcy in Canada?

Most bankruptcies in Canada are considered “voluntary” – meaning that the individual who is in debt seeks out and commences the bankruptcy process as a means to deal with their debt. The first step in declaring bankruptcy in BC (or anywhere in Canada) is to find a Licensed Insolvency Trustee in your province.

There is no need to make an application to court or ask your creditors for permission to claim bankruptcy – your Licensed Insolvency Trustee will work with you throughout the process.

Although bankruptcy is often very misunderstood by Canadians, bankruptcy in BC is quite private and most bankruptcies run a relatively straightforward course from day of signing, to the day of discharge/completion, which can occur in as little as nine months.

Filing for Bankruptcy in BC: Step-by-Step

1. Connect with a qualified Sands & Associates representative for a free consultation.

We’ll talk with you confidentially one-on-one to understand and assess your financial situation and discuss all possible options available to resolve your debts. Many people are surprised to learn after meeting with a Licensed Insolvency Trustee that a Consumer Proposal can be a better option than filing for personal bankruptcy.

If a bankruptcy filing is the best option for your debt management needs, we’ll review all key concepts of personal bankruptcy together before you commit to the process. Our goal is a “no surprises” experience, so we will spend the time to ensure you understand the ins and outs of personal bankruptcy.

The idea of talking openly with a professional about your financial situation can feel overwhelming and uncomfortable for a lot of people. Please know that we are not here to judge you or the circumstances that have brought you to us. There are many factors that can create a debt problem beyond our control; we’re here to offer you solutions, support, and a way forward!

2. Complete an application form and then sign the official personal bankruptcy documents.

You will be provided with a bankruptcy application form which allows us to compile the information needed to produce your formal bankruptcy documents. Once your application form has been completed by you, Sands & Associates will draft the official bankruptcy documents you will sign to file for personal bankruptcy.

If your situation is urgent, we can process these documents very quickly if you need immediate relief from your creditors – often in as little as 24 hours.

We will walk you through each of these legal documents during your meeting to sign the bankruptcy paperwork (this signing meeting may take place in-person, on the phone, or via video conference). Once your official bankruptcy documents are signed, your bankruptcy will be registered with the Office of the Superintendent of Bankruptcy and automatic legal protection from creditors will be in place immediately. This protection is known as a “stay of proceedings”.

At this stage, your creditors will no longer be able to charge you ongoing interest or pursue you for payment – and all collection attempts must cease. The bankruptcy filing will also serve to immediately cease wage garnishments and/or bank account seizures.

3. Work through the bankruptcy process and fulfill your personal bankruptcy duties.

There are a few main duties that you will need to fulfill as part of your bankruptcy filing in Canada. Your Licensed Insolvency Trustee will help guide you through the process and will be available for ongoing support through the proceeding.

These required duties generally include:

• • Completing a monthly “Statement of Income & Expenses” budget form tracking the income and expenses of your household and paying any surplus income calculated.
    • Your payments in personal bankruptcy are set by a government tariff and are primarily based on your household size, certain allowable expenses and national low-income guidelines. We will review these guidelines with you in detail and explain how they impact the payment you will make in your personal bankruptcy. Most people will pay $200 per month for the duration of their bankruptcy.
  • Attend two financial counselling sessions.
    • Counselling sessions are private, one-on-one sessions focused on providing you with information and resources around credit improvement and debt management.
  • Providing your Licensed Insolvency Trustee with the documents needed to complete your income tax returns, such as T4s, receipts, etc.
  • Ensuring you keep your Licensed Insolvency Trustee updated with your contact information in the event you move.

Most personal bankruptcies last for only nine months from the date of signing bankruptcy documents until you are discharged (released) from bankruptcy.

It is possible to file bankruptcy more than once in Canada – if this is the case for you then your bankruptcy term will last a bit longer than the nine-month period. Connect with a Sands & Associates representative for further details.

4. Your personal bankruptcy is complete, achieving full and final settlement and forgiveness of your debts.

Upon completion of your bankruptcy duties, you will receive an official Certificate of Discharge showing that you have completed the requirements to successfully “exit” from personal bankruptcy and begin your financial life anew, debt-free.

The debts that were included in your bankruptcy will now be written-off and forgiven by your creditors.

You are now debt-free and have achieved a financial fresh start!

Many people dismiss the possibility of filing for personal bankruptcy in Canada because they have incorrect information about how filing for personal bankruptcy in BC actually works. Sands & Associates has put together the following short video that addresses some common misunderstandings about bankruptcy in Canada.

How Much Debt Do I Have to be in to File Bankruptcy?

Bankruptcy “eligibility” in Canada is very simple: You must owe $1,000 or more and be “insolvent”, meaning that you are unable to pay your debts as they generally become due. A BC Licensed Insolvency Trustee will be able to help you assess your situation, consider and evaluate all your options and help you decide which makes the most sense to get back on track.

Insolvency VS Bankruptcy | What Does Insolvency Mean?

You may hear the terms “insolvent” and “bankrupt” used together, but they do not have the same meaning. In order to be eligible to declare bankruptcy you must be insolvent, but you can be insolvent without being bankrupt, or being forced to file bankruptcy.

Simply put, “insolvent” or “insolvency” is a term used to indicate a financial status that a person (or business) is not in a position to repay all their debts. A person or business is considered insolvent when the total amount of debts owed exceed the total amount of assets owned. In addition, even if your assets exceed the amount of your debts, you could still be considered insolvent if you are unable to pay your creditors as their bills become due because you are unable or unwilling to sell assets to make debt payments.

Sometimes determining insolvency is complex, particularly when there are a number of assets involved (some of which may be considered exempt under provincial laws), and different types of debts. Before self-assessing and ruling out solutions it is always best to connect with a Licensed Insolvency Trustee who can assist you in determining whether you are insolvent, as well as provide your options to move forward.

Although many people believe that in order to file for personal bankruptcy your situation must be exceptionally dire, your credit must be poor, and you must be facing pending legal action – all of these are untrue. While a Licensed Insolvency Trustee can stop legal action your creditors may be taking (or prevent it before it starts), we can also help you deal with your debts regardless of your credit history or score, and whether or not your debts are still being paid up to date. Many people who seek assistance from Licensed Insolvency Trustees in BC have an “ideal” credit rating but realize that they are facing a looming debt problem – in fact, research has shown that up to 70% of individuals who file for bankruptcy never missed a payment on their debts and may have very strong credit ratings. There is no requirement to be ‘delinquent’ on your debts in order to access bankruptcy services.

It’s important to know that indicators that your debt is getting out of control may look different for everyone and there are many triggering events that cause people to seek debt help. If you are experiencing one or more of the following general signs of a debt problem, or you simply want to find a better way to pay off debt, connect with a Licensed Insolvency Trustee right away. There are solutions that can stop the stress of debt and it could take as little as an hour to find the debt-free plan that’s right for you.

Signs of a Debt Problem:

• Overwhelming stress about money and general finances
• Only making minimum payments (or paying just slightly more than the minimum required)
• Accumulating more debt (continuing to rely on credit, using payday loans, etc.)
• Using assets to pay down debts
• Receiving collection calls/text messages or harassing letters
• Using credit to make debt payments
• Borrowing from friends or family members to make a debt payment
• Applying for, receiving or being denied a bank debt consolidation loan
• Missing payments altogether
• Uncertainty about how much you owe and to who
• Experiencing legal action, wage, bank account or other asset seizures (or threats of)

Find out whether a personal bankruptcy is your best option to leave debt behind for good. Book your free confidential debt consultation today.

Is it Better to Pay my Debt or File Bankruptcy?

Each person’s situation is unique, and factors that may indicate bankruptcy as the best solution to one person’s financial problems may not be the same for someone else. The amount of debt that you need to have in order to file personal bankruptcy in Canada is just $1,000 – this means there is access to bankruptcy as a debt solution, if it makes sense in your situation.

Many people believe that when they are facing unmanageable debts they have two basic options in addition to borrowing more – paying the debts in full or declaring bankruptcy. In Canada, another powerful debt solution exists that will allow you to consolidate your debts without borrowing and avoid filing bankruptcy, this is called a Consumer Proposal.

When you meet with a Licensed Insolvency Trustee or Insolvency Estate Manager to discuss bankruptcy and bankruptcy alternatives such as Consumer Proposals, some of the factors that will be taken into consideration when evaluating the options that may fit you best will include:

• The overall amount of debt you have and who you owe money to.
• Any assets that you may own and whether any have been pledged as security (i.e. vehicle financing or mortgages).
  • Most people keep all their assets when they file bankruptcy in BC – it is a myth that you are not entitled to have any assets.
• Your income, as well as your overall household income and circumstances.
• Your income tax return filing and assessment status (if known).
• Your goals and objectives when it comes to seeking debt relief.

If you’re unsure about any of the above information, we can help you fill in those gaps – there is no need to delay seeking help from a Licensed Insolvency Trustee. We are here for you!

What Happens to my Credit After Bankruptcy?

Another common concern for people evaluating debt consolidation and other debt management options is that they will not be able to rebuild their credit in future if they file bankruptcy, or that they will need to wait for seven years to apply for new credit – this is false.

Personal bankruptcy will be noted on your credit history report for six years following the date of your discharge. However, despite this notation, you can begin building your credit up and apply for credit at any point. It is quite common to be granted credit such as a new mortgage or vehicle financing within two-to-three years of exiting bankruptcy, and as little as one year after bankruptcy it is often possible to obtain a standard credit card at “best rates”.

You can learn more about steps you can take to rebuild your credit following a personal bankruptcy or Consumer Proposal in this short video.

Declaring Bankruptcy in BC – Real Stories

We believe that an important piece of encouraging people to seek debt help is normalizing how common having a debt problem truly is. Over the years we have been fortunate to be able to assist thousands of people across BC, some of whom choose to share their personal stories about the situations they were facing and how the personal bankruptcy and Consumer Proposal processes gave them a financial fresh start.

Here are two of these real stories about declaring bankruptcy in BC:

At the age of 39 Dave declared personal bankruptcy; watch Dave’s story progress, from successful lawyer to an individual going deeper and deeper into debt. Meet Dave and Watch Dave’s Story here.

Recently divorced and re-entering the workforce after being the primary caregiver for two young children, Suzanne felt her debts weighing on her and was losing sleep from the stress of her situation. Meet Suzanne and Read Suzanne’s Story here.

Do you have questions about personal or business bankruptcy? Contact Sands & Associates today to learn more or to book your confidential free debt consultation with a BC Licensed Insolvency Trustee.