What is Personal Bankruptcy

“Personal Bankruptcy in Canada is one option for solving your debt problems. It can provide immediate relief from the burden of overwhelming debts.”


Bankruptcy is a legal process that allows you to eliminate most, if not all, of your debts. It is administered by a Trustee in Bankruptcy under the Bankruptcy and Insolvency Act and is designed to allow an honest, but unfortunate debtor, to gain a fresh financial start. In a bankruptcy you surrender your assets, subject to certain bankruptcy exemptions, complete certain duties during your bankruptcy and at the end of your bankruptcy your debts are eliminated.

If you live in Canada and are unable to pay your bills when they are due, and you have considered every other alternative to bankruptcy, filing personal bankruptcy may be your best solution.

The Benefits of Filing Personal Bankruptcy

We understand that filing for bankruptcy is an option of last resort. But in certain circumstances declaring personal bankruptcy can give you significant relief from your debt and provide you with several benefits.  Bankruptcy in Canada:

  • Protects you from legal actions from your creditors.
  • Eliminates your debts.
  • Stops collection calls and harassment from creditors.
  • Stops wage garnishments and protects some of your assets.
  • Provides for credit counselling to prepare you for a stronger financial future.

After filing bankruptcy, your assets are given to the trustee, except for certain assets that you are allowed to keep.  Your trustee turns those assets into cash value by selling them.  In addition you are required to pay a minimum contribution towards your bankruptcy plus an additional payment, called a surplus income payment, based on your income.  The proceeds from the sale of your assets and your payments are then distributed among your creditors.

Information You Should Know About Bankruptcy in Canada

  • You do not lose everything by filing personal bankruptcy in Canada. Bankruptcy is not meant to be a punishment. It is meant to be a fresh start. The Bankruptcy and Insolvency Act, along with provincial legislation in your province, prevents your creditors from ceasing certain assets, including your car, furniture and RRSPs within certain limits.
  • You are protected from further legal action by your creditors. Once you decide to file for bankruptcy, bankruptcy law provides for something known as an ‘automatic stay’. This means that your creditors can no longer collect on your unpaid debts prior to bankruptcy. All of your unsecured creditors are included in a bankruptcy so you have protection from all collection calls, wage garnishments and other legal actions. Your Local Bankruptcy Trustee can advise you on what to say to creditors who continue to contact you after you file for bankruptcy until they receive notification from your trustee.
  • It allows you to eliminate most (if not all) of your debts. Bankruptcy is about giving you a fresh financial start. By eliminating your overwhelming debt you can begin the process of rebuilding your credit and starting over.

Let Us Help

To talk to a Local Trustee about whether or not bankruptcy is right for you, complete our FREE on-line debt evaluation.  One of our Local Bankruptcy Trustees will contact you to discuss your options.

Get A FREE Debt Evaluation from a Local Bankruptcy Trustee near you.