How Does Filing for Personal Bankruptcy in Kitchener Work?

If you’re considering filing for personal bankruptcy in Kitchener / Wateroo, it’s quite likely that you’ve become overwhelmed by growing debt.

And if that’s the case, you’re not alone. In fact, last year, over 125,000 Canadians found themselves insolvent.

This article is intended to assist you with some basics about filing for bankruptcy in Kitchener or Waterloo.

What is my first step if I want to file for bankruptcy in Kitchener?

The entire process starts with reaching out to a Kitchener Licensed Insolvency Trustee.

What is a trustee?

A trustee is the only professional who can administer a bankruptcy or Consumer Proposal in Canada.

Over and above insolvency assistance, these federally-licensed and regulated professionals can help you with a full range of other debt relief options.

What will my trustee do?

In your initial, free consultation, a trustee will review your current financial situation.

You’ll need to provide the trustee with a list of your assets, creditors, how much you owe, as well as other personal information pertaining to your family income, household expenses, and so forth.

After getting a comprehensive picture of your particular circumstances, your trustee will advise you on all the options you have available to you to address your debt. He or she will review the pros and cons of each, and provide you personalized advice as to your best solution.

You then choose how to resolve your debt.

If bankruptcy turns out to be the right choice for you, your trustee will prepare the bankruptcy paperwork.

Your trustee will arrange to meet with you again to review it, and have you sign should you wish to proceed.

Once signed, your trustee electronically files the paperwork with the Canadian government’s Office of the Superintendent of Bankruptcy.

Okay, I’ve signed the paperwork and am officially bankrupt. Now what?

Your trustee will send a formal notice to your unsecured creditors immediately after filing the documents with the government. Your creditors then file their claims with the trustee.

Immediately upon electronic filing, you get legal protection from your unsecured creditors.

This means your creditors cannot start or continue any debt collection efforts against you, including lawsuits, wage garnishments, or even simple calls to request payment from you.

To be clear, bankruptcy deals only with your unsecured debts. This includes things like credit cards, personal loans, and so on.

Secured debt, such as a car loan or mortgage, for which you’ve given your creditor collateral, is not covered in bankruptcy unless you choose to give up the collateral. If you stop your payments to secured creditors, they can seize the collateral.

In Ontario, if you give up the collateral and it is sold by the secured mediator, you would not be responsible for any shortfall owing to the secured creditor once they sold the collateral.  For example, if a secured creditor is owed $10,000 and they seize the collateral and sell it for $6,000 the remaining $4,000 would become an unsecured debt covered by your bankruptcy.

What are my duties during bankruptcy?

To complete your bankruptcy without a hitch, you’ll need to:

• Attend two mandatory credit counselling sessions.
• Submit proof of income and expenses every month.
• Make monthly payments to the trustee (which go to the benefit of your creditors) if you have surplus income. Surplus income is the income you make over and above the level set by the government for your household to survive.
• Provide your trustee the information needed to file your tax returns up to the date of bankruptcy. (Note that money you owe the Canada Revenue Agency will be included in the bankruptcy, and any tax refund or credit you are owed will go to your trustee for the benefit of your creditors.)
• Attend any meetings requested by your creditors.
• Update your trustee about changes to your personal and contact information.

What happens after bankruptcy?

Most first time bankruptcies discharge after 9 months, so long as you don’t default on your duties and you have no surplus income. The length of time for discharge is greater if you do.

You should also be aware your bankruptcy remains on your credit report for a minimum of 6 years after the date of discharge. While this may affect your ability to get credit, options such as secured credit cards are available to you after discharge depending on your situation.  After discharge, take this time to slowly rebuild your rating so that lenders will look more favourably upon you in the future.

Will all my unsecured debts be discharged?

No. There are some exceptions, such as student loans less than 7 years old, alimony or child support, and debts arising from fraud. Contact your trustee for a complete list.

Contact a Kitchener Licensed Insolvency Trustee Today

Bankruptcy is a legal process that requires you to consult a trustee. If you want to learn more about how bankruptcy works in Canada, and whether you have any alternative to it, contact us today. We’ll discuss your financial situation with you and help you achieve the fresh start you deserve.