With the skyrocketing prices of goods and services, many people are finding themselves in difficult financial situations. If you are suffering from any kind of financial difficulties like overwhelming debts, you may without hesitation consider bankruptcy in Canada as the solution to your problems. You need not to fret as there are many people who are filing for bankruptcy Canada as a way to get debt relief.

Many people don’t know the main causes that lead to bankruptcy in Canada. The first cause is loss of job or income. When you lose your job or your income gets reduced, you may find it difficult to clear your bills and debts. To avoid going bankrupt, you need to reduce your expenses and be able to service your debts. Secondly, another cause of bankruptcy Canada can be separation or divorce. Divorce as affected many people’s financial status as each partner goes his or her own and start solving daily problems a situation that may affect his or her finances. Other causes of bankruptcy in Canada are medical problems, unpaid loans and so on.

Before, you take any step to solve your financial problems; you need to know the benefits of bankruptcy Canada. It helps provide protection from legal action and wage garnishment. It also eliminate unsecured debts.

Personal bankruptcy Canada is very imperative especially for residents who are not able to clear their bills when they are due. Any person who owes more than $1000 is a potential beneficiary for bankruptcy other idea candidates can be those who rapidly need finance for their survival. Filling for bankruptcy is never easy. It can be daunting and challenging, but through profession assistance and great knowledge and experience to solve such problems, you will be at a better chance to prevent your properties from foreclosure.

Before, you file for bankruptcy; you need to know how bankruptcy Canada works. This process works if you have a reliable and experienced bankruptcy trustee.

Where should you start?  Start by watching our bankruptcy Canada videos for more information.

For many, bankruptcy in Canada is a very scary and often misunderstood legal procedure. It is definitely intimidating to those that have no clear idea on what to expect and how long the procedure will last. It is important to become educated as much as possible before even beginning the bankruptcy process. Thankfully there are resources you can turn to for help and guidance.

Every country has differing requirements for bankruptcy and getting debts back in line. In Canada there are numerous options. One of the first options to consider is a debt management plan through a not for profit credit counsellor. A debt management plan does not erase debts..instead it helps individuals bogged down with too many payments get those payments back under control. It helps establish flat rates to pay each month, sometimes substantially less than the original payments, so that debtors can pay off the debt and still maintain credit. In most cases you repay the debts in full, but at a reduced interest rate.

If you can’t afford a debt settlement, a consumer proposal is another option for dealing with your debts, where you offer to repay a portion of the amount owing.  Why would a creditor accept a consumer proposal?  Because they expect to receive more in a proposal than in a bankruptcy.

If those options are not practical, a bankruptcy may be your only option, but we suggest you review all options before making a decision.

Thinking about filing bankruptcy in Canada? This can be very stressful. Not knowing whom to trust, whom to turn to, what questions to ask, what steps do you take to safe guard your family’s future? Welcome to Bankruptcy-Canada.com,  where you will find the help you need once you decide you need help.

We can arrange a free initial consultation with a licensed bankruptcy Canada trustee so you can understand all of your options. This will help you decide if you would want to file for bankruptcy in Canada.

Once you have decided which options to follow, which may include a consumer proposal as an alternative to bankruptcy, you will feel a sigh of relief knowing that you have taken the necessary steps to move forward with your life.

Review your options, do your research, and make an informed decision.

In these tough economic times, debt has become a major problem in Canada. Bills can easily accumulate to a point where it will be almost impossible to pay them all.  Bankruptcy in Canada is a process where you can either eliminate or repay a portion or all of your debt. Here are the steps needed in order to file personal bankruptcy in Canada.

• Arrange to have a licensed bankruptcy trustee perform a free initial consultation. During this consultation the trustee will assess your financial situation. In this meeting you will make the trustee aware of all of your assets and prepare, review and sign the necessary paperwork to begin the filing process.
• The trustee will then file an assignment in bankruptcy with a division of the federal government called the Office of the Superintendent of Bankruptcy. This document states that you are willingly starting the bankruptcy process to eliminate your debts.  Once this document is a filed and in effect, most of your creditors will not be able to continue legal proceedings against you and they will stop calling you.
• During the bankruptcy process you are then required to make monthly payments to cover administrative costs, provide proof of monthly surplus income to your trustee, and attend two credit counselling sessions. You are also required to provide the trustee with information necessary to file tax returns.
• At the end of seven months after the bankruptcy has been filed, your trustee will calculate your average income and determine if you are required to make surplus income payments. This amount must be paid in full before you can officially be discharged from the bankruptcy. In Canada, a net monthly income is set for individuals to maintain a reasonable living. For every dollar over that threshold that you earn you are required to pay fifty percent to the trustee for the benefit of the creditors.
• Once all obligations of the bankruptcy have been met, you are eligible to receive a bankruptcy discharge.

That’s it! Once you are discharged your debts are officially gone, and you get a fresh start.

It can be overwhelming and extremely stressful to be over your head in debt. At times even the best financial plan can do little to ease the amount of debt one has accumulated.

Luckily, there is an option to get a fresh start and get the creditors off your back. Filing bankruptcy in Canada may be your best solution to starting anew.

To most people the idea of bankruptcy exudes the image of an irresponsible individual that is negligent of their credit. This is merely an illusion. There are many responsible people who are hard-working individuals who have got into debt due to job loss, divorce, or medical problems.

These people become overwhelmed with paying their day to day expenses as well as covering the high cost bills that seem to keep piling up. They find themselves slaves to the dreaded calls from creditors who seem to disturb the natural order of life.

Many people have to file bankruptcy in Canada due to the roller-coaster that has happened in the Canadian housing market, or due to the credit card companies that increase interest rates with no warning. If you are one of the many Canadians who simply feels drowned in bills and wants a fresh start, filing bankruptcy in Canada may be the best option to get you back on your feet and focused on the future instead of buried in the past.

Question:

AFTER A NOTICE WAS SENT ANNOUNCING A PERSONAL BANKRUPTCY AND ASKING FOR A MEETING WITH THE CREDITORS, HOW LONG DO THEY HAVE TO RESPOND TO THE NOTICE? OR IS THE PERSON LEFT HANGING IN LIMBO INDEFINITELY?

HOW WILL I KNOW IF THEY RESPOND OR NOT?

Answer:

When you file bankruptcy in Canada, all creditors are advised of the bankruptcy, and they are given the option to request a meeting of creditors.  Most personal bankruptcies in Canada pass by without the need for a meeting of creditors.  The creditors are given a chance to request a meeting, but rarely exercise that right.  There are two situations however, where a trustee must call a meeting;

1. If the Official Receiver requests the trustee to call one, or
2. If creditors that are owed more than 25% of your total debt request one.

The request is made to the trustee any time before the date you’re eligible to receive your discharge from the bankruptcy.  This helps to ensure you’re not left wondering indefinitely if one is going to be called.  If a meeting is to be called, it’s most likely that the creditors like it to be at an early stage of the bankruptcy.

The main benefits to calling the meeting at an early stage is that it allows the creditors a chance to give directions to the trustee with respect to how they’d like the bankruptcy to be administered or matters of concern they’d like to be addressed by the trustee.

If a meeting is called, the trustee will notify you of the time and place. The meeting is usually held at the trustee’s office and you should prepare to attend the meeting so that you can answer any questions or provide information to address the creditors concerns.

One reason meetings are rare in most personal bankruptcies is because creditors with questions will often just ask the trustee via phone or email rather than calling an official meeting as they can often get a quicker response that way.  Meetings of creditors are a little more common place in corporate bankruptcies where the number of creditors could be much higher and issues revolving around the bankruptcy are more complex.

There are no specific rules that way when a creditors’ meeting must be called, but presumably it would occur before the bankrupt’s discharge.  In practice, if it was going to happen, it generally would happen during the first few months, since there’s not much point in waiting until the end to call a meeting.

If you file bankruptcy in Canada, you are required to report your income to your bankruptcy trustee each month, and if you have surplus income you are required to make extra payments.  The amount you are permitted to earn while bankrupt is set by the government of Canada, based on your family size, and each year they adjust the limits for inflation.  The limits for 2012 are about 2.8% higher than they were for 2011.

Here are the limits set for 2012, based on your family size:

How does the calculation work?  Please see our page on surplus income and bankruptcy in Canada for more information, or read our articles on surplus income:

• Bankruptcy Canada Surplus Income Limits for 2012 Released by Government
• Surplus Income and Three Paydays
• Surplus Income if Spouse Won't Disclose Income
• I'm separated: can I file bankruptcy in Canada as a single person?
• Surplus income, single with adult child
• Surplus Income, Bankruptcy in Canada, Only One Person Bankrupt
• Surplus Income and Bankruptcy in Canada: The Hidden Trap

As a bankruptcy trustee in Canada with over twenty years of experience, there are four sure fire, obvious warning signs that you are heading for bankruptcy in Canada.

4 Collection calls all day and night: When you get behind on your bills, the bill collectors start calling.  And calling.  And calling. Of course it’s not an actual person who is calling you; it’s a computerized “robo-caller” that dials your phone number, and if you don’t answer they put you back on the list, and call you again in and hour.  Any they keep calling.  If you keep ignoring the phone calls they will keep calling, and eventually your creditors may decide to take you to court and garnishee your wages.  At that point you may have no choice but to declare bankruptcy in Canada.

3 Unopened Mail: At least once every week someone arrives at my office with a stack of unopened mail.  They don’t want to know how much they owe, because they know they can’t pay it.  Try this test: look at your kitchen table, or wherever you store your mail: do you have a stack of unopened bills?  If you do, that’s not a good sign.

2 “Robbing from Peter to pay Paul”: I meet with many people who are “up to date” on their credit card and loan payments.  They have done a great job to never miss a payment. How do they do it?  They take a cash advance from one credit card to make the minimum payment on another.  Then, next month, they use their line of credit to make their credit card payments.  One person described this to me last week as  ”financial gymnastics”, and that’s a good description.  Unfortunately borrowing to make your debt payments isn’t helping; it’s only prolonging the inevitable.

1 The Hole is Too Deep: The final and most obvious sure fire sign that you are heading for bankruptcy is that your cash shortfall each month is so great there is no chance that you can ever catch up.  You make $2,000 per month, but your debt payments are $1,500 per month, so when you add in rent and food and transportation there is no way to ever get caught up.  The financial hole is too deep.

Is this you?  Are you getting collection calls?  Are you afraid to answer the phone, or open your mail? Are you robbing from Peter to pay Paul?  Do you have a massive cash shortfall each month?

You may be heading for bankruptcy, or perhaps you need another solution, like a consumer proposal.  Either way, debts don’t go away on their own, so now is the time to book a no charge initial consultation with a licensed bankruptcy trustee and consumer proposal administrator to review your options.

Wouldn’t it be great to be able to answer the phone again?

Question: I have a home which I have a 1st & 2nd mortgage on which are current.

But because of my failing business I have accumulated $700,000 in unsecured debt which I’m now in default of.

The equity in my home is less than $70,000 in a perfect market but more than likely $40,000 in a fire sale repo type sale.

I don’t have a phone so I’m not getting any phone calls and I really don’t care about the collection people my skin is thick at this point in my life.

I know they can sue me in court and get a writ of execution against me in court and put a lien on my home, then foreclose, sell my home, but must first pay off my 1st & 2nd, plus property taxes, worst case scenario.

But when their lawyer does a credit report on me they will see over $700K in outstanding bad debt which I can no longer service.

1. Will the fact I have $700k in bad debt factor into them wasting more money chasing me, with the absolute real risk they won’t actually get anything back?

2. Can I be forced to go bankrupt if I have nothing as far as assets left in my life are concerned, except for a home that really doesn’t have much left in equity?

I don’t have any income what so ever, we are living on scraps and my wife and I can’t find any work and our family are helping us out so we don’t starve or move in with them.

Answer: It is very rare that a creditor forces anyone to declare bankruptcy in Canada.  It is theoretically possible for a creditor to petition you into bankruptcy, but it almost never happens, because there is usually nothing for them to gain by forcing you into bankruptcy.

The more common scenario is that the creditors call you, then send letters, then perhaps take you to court and sue you.  In your case you are correct; if they see that you have large debt, they may not bother, because they may assume that as soon as they take you to court you may voluntarily declare bankruptcy.

It is possible that a creditor could sue you, obtain a judgement, and then register a lien on your house.  That theoretically gives them the power to sell your house (if they go through the courts to foreclose), but in most cases the lien simply remains on your house until you sell the house, and then they get paid if there are any funds available.  Again, you are correct that once the creditors see that you have two mortgages they may decide it’s not worth the effort.

At this point you have two obvious options, in addition to continuing your search for employment.

First, you could simply do nothing, and borrow from family and friends to keep the mortgages current.

Second, if you don’t think your situation will improve in the short term, you could sell the house and realize whatever equity is there, and then use that money to survive and rent a place until you are working again.  Obviously if you sell the house you would not want to deposit the money in a bank where you owe money.  Depending on the value of the house and your future employment prospects you could then decide if a bankruptcy is necessary at this time.

Douglas Hoyes, Bankruptcy Canada Trustee

Here’s a sobering statistic: 1 out of every 6 adult Canadians will declare bankruptcy or file a consumer proposal.  How is that possible?  Here’s the math:

According to the Office of the Superintendent of Bankruptcy, in Canada each year there are between 130,000 to 150,000 Canadians who declare bankruptcy or file a consumer proposal.  Projecting forward, over the next 30 years, assuming bankruptcy and population rates remain stable, that means that approximately 4.5 million Canadians will file a consumer proposal or declare bankruptcy.

According to Statistics Canada, the adult population of Canada is just over 26 million people.

4.5 million insolvency filings divided by 26 million people is an insolvency rate of 17%, or more than 1 in 6 Canadians.

And yes, I realize that if you projected more than 30 years into the future the number would be even higher, but if you didn’t double count the people who file a second bankruptcy the number would be reduced, but as a rough estimate 1 in 6 is probably fairly close to the true insolvency rate in Canada.

So why will 1 in 6 residents of Canada eventually go bankrupt or file a consumer proposal? The answer is simple:

Debt.

As I have said before, excessive levels of debt leads to bankruptcy in Canada.  I’m not the only one who thinks we have too much debt.  The Bank of Canada, in a report released in early 2012 explains the trends in household debt in Canada, and the trends are clear: debt is going up.  It’s not just debt; our debt to income ratio has increased over the last thirty years.  Why? Because low interest rates have encouraged us to buy more big ticket items like cars and houses with debt.

Debt has helped our economy grow.  The housing boom of the 1990′s and the early 2000′s was fueled by low interest rates, which is great as long as you have a good job and can keep up with your debt payments.

However, if you lose your job, or get sick and can’t work, or if you get separated or divorced and your circumstances change, debt becomes a very big problem.

Don’t believe me? Just gather up 5 of your friends and ask them, because one of your group is statistically likely to become insolvent.

That’s the math.  If you don’t want to be a victim of the math, take steps to cut your debt now.  If you are already in over your head, and if you think you will be that one person out of six, there’s no point in prolonging the agony; talk to an expert and review your options.