How to File for Bankruptcy in Canada
If you are a Canadian citizen
or permanent resident, and you are having personal financial problems such as overwhelming debt, unexpected loss or reduction of your monthly income caused by job loss or considerable payment cut, you may be thinking of bankruptcy. Also, if you are unable to pay off your student loan
or debts accumulated in the process of recovering from a serious blow on you income or another troublesome accident in your life, you may see filing for bankruptcy as the only way out of this financial predicament. First, it may bring you some comfort if you learn that many people are frying in the same pan with you. Latest statistical information shows that as many as 100,000 Canadian citizens or permanent residents file for personal bankruptcy
On the other hand, you should file for bankruptcy only if you have exhausted all other resources to put your financial problems under control such as refinancing through a debt consolidation loan
, signing up for a credit counseling program that usually goes with a strict debt management plan
, filing a consumer proposal
with your creditors, etc. If you have tried all of these options and none of them worked for you, then your last line of defense is filing for personal bankruptcy. If you find it hard to determine which of the abovementioned solutions will suit you best, you can ask a bankruptcy trustee for advice.
Filing for bankruptcy is a relatively straightforward process: first get in touch with a federally licensed trustee who will review and evaluate your financial situation. Filing an assignment in bankruptcy, prepared by the trustee, is the next step which indicates that you agree to assign your assets to the trustee. He or she will be responsible for distributing your assets to the creditors.
The trustee files assignments and relevant paperwork with the Office of Superintendent of Bankruptcy so that your creditors cannot continue or proceed with legal actions against you. You have to also attend counseling sessions with your trustee and talk about the circumstances that resulted in filing for bankruptcy. Before you are discharged, you will have to pay surplus income to your creditors.
Here are the most common advantages and disadvantages of filing for a personal bankruptcy in Canada: first, such a move will shield you from any collection action whatsoever, and it will also wipe out all of your unsecured debts. The whole bankruptcy procedure takes relatively short time to complete, and it is also quite affordable from a financial perspective. On the other hand, filing for bankruptcy will cast a blow on your credit history
, and it will be very difficult, but not impossible, for you to rebuild your credit score
when your financial situation improves. Also, in the process of filing for bankruptcy, you may be required to surrender some possessions to your trustees, as well as keep detailed records of your income and expenses during the bankruptcy period.
Nonetheless, if you have decided to file for bankruptcy, your credit rating must be so bad that there is hardly anything that can make it worse. In this line of thought, your bankruptcy statement may be your ticket to a fresh financial start.