There is so much to think about when deciding whether or not you should declare bankruptcy that we thought it might be helpful to outline some of the important pieces of the puzzle. Here are the basic answers to some common questions and where you can find more information.
How long is bankruptcy? If you have never been bankrupt before and have a modest income, below the government set ‘surplus’, you can be ‘discharged’ (cleared of the debt) from bankruptcy in as little as nine months. If your income is higher and you have surplus you will be bankrupt for 21 months. More information can be found in our article How Long Will I Be Bankrupt?
What’s ‘surplus’? A government guideline that says that if you make over a certain level of income (for a single person that level is $2,121 per month, net pay) you have to pay ½ of that ‘surplus’ into the bankruptcy. Read more about Surplus Income.
Can I be ‘discharged’ (cleared of) all my debts? Maybe. Certain debts cannot be discharged, for example student loans if you’ve been out of school for less than seven years, or fines imposed by a court. For more information, read our article What Debts Are Eliminated When Filing Bankruptcy?
Will I lose my car? Not usually. Most provinces have exemption limits which cover most owned vehicles unless they are very valuable. Fully financed or leased vehicles can usually be kept as long as you can keep up with the payments. Read more: Can I Keep My Car in a Bankruptcy?
What do I have to do during bankruptcy? The most important things to do will be outlined in full by your trustee, but the basics are: make your required payments, attend two credit counselling meetings, provide the trustee with information to file your taxes, send in a monthly income and expense report, keep the trustee up to date with any address or email/phone number changes. To understand why these duties are important read Your Duties During Bankruptcy.
Can I be turned down for bankruptcy? No, if you owe more than $1,000, can’t pay all the debt, aren’t already bankrupt, (from a previous undischarged filing) and live, work or own property in Canada, you can file bankruptcy. See: Are You Eligible For Bankruptcy?
If I can’t pay all my debt is bankruptcy my only option? Not at all, in fact most of the people we meet with DON’T file bankruptcy. In many cases, a consumer proposal, which is a deal to repay just a portion of your debt, over time, is a much better option than bankruptcy. Understand your Bankruptcy Alternatives.