Are You Eligible For Bankruptcy

You’ve decided that you need help in dealing with your debt and might need to declare bankruptcy. How do you know if you are eligible for bankruptcy?

Who Qualifies For Bankruptcy

The answer is very simple. To be eligible to file for bankruptcy you must:

  • owe at least $1,000 and
  • have debts greater than the sale value of your assets and
  • are unable to pay your debts when they are due.

Let’s look at each of these a little closer.

Do you owe your creditors more than $1,000?  This is simple math.  Add up what you owe and if it exceeds $1,000 then you qualify for bankruptcy based on this requirement.

Are you unable to pay your debts as they come do? Can you make your monthly payments? Have you been making them? Are you only making the minimum payments on your debts and cannot afford to pay more. This requirement is also pretty simple to determine and will tell you whether or not you are eligible for bankruptcy.

The last requirement may be very simple, or quite complicated, depending on what you own and whether or not you are still making payments for them.  For example, if you own nothing, then it is easy to determine that if you sold the things you own (nothing) they would not generate enough money to pay off your debts.  If you own a home with lots of equity (your home is worth more than you mortgage) then the question isn’t as simple.  If you have savings, or multiple cars, vacation property, even RRSPs, they all have to be considered and their value determined and compared to your total debts.

In order to be eligible for bankruptcy you need to meet each of the three requirements.  Taken together they are called a solvency test.  In order to qualify for bankruptcy you need to be insolvent, which means you meet all three criteria.

Your Consultation With Your Bankruptcy Trustee

If you are uncertain if you are eligible for bankruptcy then we suggest you contact your Local Bankruptcy Canada Trustee and ask them to review your situation.  Consultations are free and most people find them helpful.

When you meet with your trustee, not only will they determine whether or not your are eligible for bankruptcy, they will also help you answer the question: Should you file for bankruptcy?