Frequently Asked Questions

A proposal asks your creditors to compromise the debt - accept less money in settlement, extend the time for payment, or a combination of both. It is a legal process regulated by the Bankruptcy and Insolvency Act.

Your debts cannot exceed $250,000, excluding your mortgage. You must be able to prove that you can reasonably meet the terms you are offering - assets that could be sold for cash, or income to meet monthly payments

An administrator at a trustee's office will assist you in preparing the proposal and send it out. Your creditors have 45 days to record their vote " for" or "against". If the majority of your creditors accept the proposal, all of your creditors are bound by the terms.

You will keep control of your assets in a proposal except those assets you may be selling as part of your proposal.

If you do not meet the terms of your proposal, it will be annulled and the creditors can take legal action against you.

When you have fulfilled your obligations you will receive a certificate of full performance. You are then relieved of any further obligation to pay those creditors.

You will be required to attend two financial counselling sessions. This counselling must be given by a counsellor registered with the Office of the Superintendent of Bankruptcy. You will be provided with information concerning money management and suggestions which will assist you in establishing a rehabilitation plan. Counselling may also be provided to someone who is related to you or has a financial relationship with you.

Bankruptcy is a legal process to allow an honest debtor to be released of most debts and given an opportunity for a fresh start. It also ensures that creditors are treated equally in the process. You must consult a licensed trustee to administer the process.

Basically, you must owe $1,000, be unable to pay your debts as they become due, and have insufficient assets that could be sold to repay your creditors.

If your house is pledged under a security agreement, such as a mortgage, that creditor will retain the right to expect payment or the asset will be repossessed. If there is equity in the home, the unsecured creditors are entitled to receive it and the property may have to be sold. However, if there is no equity, you may make arrangements with the mortgage holder to continue your payments provided you make arrangements with your trustee to transfer title back to you after your assignment.

An employer cannot fire you simply because you have filed for bankruptcy. In most cases the employer will not be aware of your actions. However, if there is a wage garnishee in place, your employer will be notified to cease deductions immediately.

Generally you qualify for an automatic discharge in nine months. No court appearance would be necessary and you will receive a certificate confirming your release from your former obligations to your unsecured creditors.

Trustee fees, filing fees and counselling fees are regulated by the government. The trustee normally is paid out of the funds arising from the funds collected from the bankrupt's assets. If the bankrupt has no assets available, then the trustee will require a retainer or require the bankrupt, over time, to pay the trustee's fees and disbursements. We have a payment plan that allows you to pay the costs over time.

You will be required to attend two financial counselling sessions. This counselling must be given by a counsellor registered with the Office of the Superintendent of Bankruptcy. You will be provided with information concerning money management and suggestions which will assist you in establishing a rehabilitation plan. Counselling may also be provided to someone who is related to you or has a financial relationship with you.

Any student filing for bankruptcy within seven years of ceasing to be a full or part-time student would not have their debt released by their discharge from bankruptcy, however, an application to the Court may be made after the expiration of the 10-year period to have the debt discharged.

The trustee is required to file an income tax return for the pre-bankruptcy period of time (January 1 to the date of the bankruptcy), as well as for the preceding year if the return has not been filed by the bankrupt. The trustee also files a return for the post-bankruptcy period (date of the bankruptcy to December 31) if there is a benefit to the creditors, such refunds are an asset of the bankruptcy estate.

Where the bankrupt has "surplus income" as determined by the "Standards" issued by the Office of the Superintendent of Bankruptcy, the bankrupt may be required to pay a specified amount over several months for the benefit of the creditors before receiving a discharge.

• Absolute - discharge becomes effective immediately.
• Conditional - discharge becomes effective when terms are complied with (such as payment of a sum to the estate or the performance of an act).
• Suspended - discharge is postponed for a specified time period.
• Refusal - discharge is refused where the conduct of the debtor is particularly reprehensible or the debtor is incapable of rehabilitation.

Some debts are not released, such as an award for damages in respect of an assault, alimony, spousal or child support, debt arising out of fraud, any court fine, debts or obligations for student loans when the bankruptcy occurs within seven years after the bankrupt has ceased to be a student.

Yes, they will! By law, all actions against a bankrupt must cease once the documents are filed. This does not apply to secured creditors such as banks holding, for example, a lien on a car.

If there are minimal assets, the creditors are notified by mail only - there is no advertisement in the newspaper. Any legal filing of a bankruptcy is a public document which the general public has access to. From this documentation, the Credit Bureau is notified and the bankruptcy is recorded and will remain on your credit record for 6 years. This does not mean that you cannot obtain credit during this time. Any granting of credit is the responsibility of the creditor to approve.

No. They cannot. If your bank cancels or refuses to open a bank account for you because you have been or are in bankruptcy they are breaking the law.

There are two ways a person can go into bankruptcy. The first is to make an assignment in bankruptcy (voluntarily go into bankruptcy). The second is for creditors to ask the Court to make an Order that a person is bankrupt. In both these cases a Trustee in Bankruptcy is required to administer the bankruptcy.

Wages and salaries or commissions, belong to the bankrupt person and are not interfered with by the trustee in the ordinary course of events. There are standards supplied to the trustee by the Superintendent of Bankruptcy that requires the trustee to collect funds, for the benefit of creditors, from any earnings above what is reasonable for the number of people in the family and the bankrupt's personal situation.