BANKRUPTCY – THE PROCESS
This blog provides you with a quick overview of the process of bankruptcy – what to expect.
Only a Licensed Insolvency Trustee can file a bankruptcy – credit counsellors or debt consultants can only help you to find a trustee. Sometimes they will charge you a fee for the referral. You can find a Licensed Insolvency Trustee by following this link to the Federal Government website.
You must meet with a Licensed Insolvency Trustee or one of his/her staff in order to assess your situation to determine the best course of action for you and your family. They will recommend options for you and explain the pros and cons. The choice of how you will proceed is yours.
During your initial meeting the Licensed Insolvency Trustee (or staff member) will provide you with an application form – sometimes it will be filled out at the time of the meeting. The more information you can provide the easier that process will be so be sure to bring along some government ID and recent credit statements.
After the application has been input at the Licensed Insolvency Trustee’s office they can print the necessary paperwork for you to execute (sign) to commence the process registering the estate (file) with the Federal Government. All bankruptcies are registered electronically by e-filing with the Office of the Superintendent of Bankruptcy.
PROTECTION FROM CREDITORS
You are immediately, and automatically upon signing, protected from legal actions and other collection activity by your creditors under the provisions of the Bankruptcy & Insolvency Act.
LENGTH OF BANKRUPTCY
The length of your bankruptcy will vary depending on your circumstances:
First time Filing:
If you do not have surplus income (see our blog on surplus income) and you are filing for the first time you will be entitled to an automatic discharge after the expiration of nine months. If you do have surplus income and you are filing for the first time you will be entitled to an automatic discharge after the expiration of twenty-one months.
Second Time Filing:
If you are filing for a second time and have no surplus income you will be entitled to an automatic discharge after twenty four months and if you do have surplus income the timeframe for an automatic discharge will follow after thirty-six months.
Third or More Time Filing:
People who have for bankruptcy three or more times must attend at court to obtain a discharge.
THE STUFF YOU HAVE TO DO DURING THE PROCESS
You will be required to attend at two Credit Counselling sessions – the idea being to provide you with budgeting, money management and credit handling information to help you to avoid getting back into a pickle.
If you move you will be required to keep your Licensed Insolvency Trustee apprised of your whereabouts.
MOVE BANK ACCOUNT
Your Licensed Insolvency Trustee will advise you to ensure that you are not banking where you owe money at the time of your filing – this is good advice and should be followed.
Each month during your bankruptcy you will be required to report your income to your Licensed Insolvency Trustee in order that the office can assess any changes in your requirement to pay surplus income.
Your Licensed Insolvency Trustee will be required to file an outstanding income tax return on your behalf as well as the income taxes for the year of bankruptcy.
There are other responsibilities that you will have during the process such as notifying lenders of your bankruptcy when attempting to borrow money in excess of $1,000 and providing any missing information pertaining to your creditors or any property that you own to the Licensed Insolvency Trustee.
A first time bankruptcy filing is on your credit bureau report for six years following discharge. A second or subsequent bankruptcy filing shows for fourteen years. However, most people taking the proper steps find that credit starts to become available again after about 1-2 years following discharge.
FOR MORE INFORMATION CALL 519-646-2222 FOR YOUR FREE CONSULTATION.