Business Bankruptcy in Canada is primarily governed by the Bankruptcy and Insolvency Act (BIA), a…
Deciding whether or not you should proceed with personal bankruptcy is not easy. Bankruptcy is widely considered a last resort to help honest debtors deal with what has become overwhelming financial debt. That said, the actual process to file for bankruptcy itself is pretty simple.
If you are looking to file for personal bankruptcy, the below easy steps will help you get there.
Six Bankruptcy Steps to Help Get You Closer to Your Fresh Start
Step #1: Acknowledge your financial situation and make the decision to get help.
You can’t get help for a problem you don’t even recognize you have. Your first step towards filing for bankruptcy is to face your financial situation head-on.
When you actually reflect on your current circumstances, you may realize that you’re no longer able to cope with your mounting debt.
Ask yourself the following questions to help determine whether you have an issue that you need assistance resolving.
- Are you missing your monthly mortgage or loan payments?
- Do you hit the limit of your credit card(s) each month?
- Are you using credit card cash advances to pay your bills?
- Have you taken out a payday loan to make ends meet?
- Are you starting to receive calls from collection agencies?
- Have you received a garnishment order?
- Have you received notice of legal action against you to collect on your debts?
If you answered yes to one or more of the above questions, you need to get started on the path to regaining control of your financial health. The next step in doing so is to reach out to the right expert for help.
Step #2: Contact a Licensed Insolvency Trustee.
If you want to declare bankruptcy, you are required by law to consult a Licensed Insolvency Trustee. While the process of declaring bankruptcy is relatively simple, it’s still a legal process. And trustees are the only individuals licensed by the Canadian Superintendent of Bankruptcy to help administer Consumer Proposals and bankruptcies.
These government-regulated professionals will review your financial situation with you and help you understand what options are available to you in your particular circumstances. Their job is to help you resolve your debt so you can achieve the financial relief you seek.
When you’re selecting your trustee, you’ll want to consider the following:
Is the trustee local or at least easily accessible to you?
It is important that you find a trustee that will stay involved with you and be available to you on a face-to-face basis to evaluate your situation. They need to remain available throughout the process to deal with any matters that might come up. It’s important that you can easily visit your trustee in-office.
Are you comfortable communicating with the trustee?
You need to feel okay asking your trustee questions. A caring trustee will explain his or her responses in a way that you can understand.
Is the trustee licensed by the Superintendent of Bankruptcy?
Remember, as the only professionals allowed to assist you with administering a Consumer Proposal or bankruptcy, you should ensure the person you visit is licensed. You can verify this by searching the trustee’s name on the Government of Canada’s website.
Step #3: Meet with your trustee to review your options.
The initial consultation with your trustee is free. And at Adamson & Associates Inc. we do not limit the free consultation to only one. We know people often require time to think about options or may have more questions that they forgot to ask at the previous appointment. At your first meeting, you will be asked to bring documentation with you and respond to questions about your finances.
It’s important to come prepared. Know what your income, expenses, assets, and debts are. It’s only in this way that a trustee can give you pertinent, valuable advice, and suggest alternatives to bankruptcy if they exist in your situation. Other options to resolve your debt may include consolidation of your debt and a Consumer Proposal, both of which your trustee can assist you with.
You should come away from your initial consultation with the pros and cons of each option that’s available to you in your circumstances. And keep in mind that the ultimate decision of how you proceed is yours.
Step #4: Give your trustee the information he or she needs to prepare the paperwork for your bankruptcy.
If you end up deciding to file for bankruptcy, you’ll need to provide your trustee with the requisite information to do so. This information includes your personal details (such as name, address, date of birth, etc.) and a list of your creditors and assets.
Your trustee will provide you with the requisite bankruptcy forms to complete, including an Assessment Certificate. This Certificate confirms you’ve met with the trustee, understand your options, and have chosen to file for bankruptcy.
Once the initial paperwork has been prepared by your trustee, he or she will review the bankruptcy process with you again. It’s at this point that you are able to review the information and ask any further questions you have.
Step #5: File for bankruptcy.
Once you sign the requisite bankruptcy forms and papers, your trustee will electronically file your bankruptcy documents with the Office of the Superintendent of Bankruptcy. It is at this point that your bankruptcy is deemed to have begun.
Within five days, your trustee will also submit a copy of the documents to your creditors. By doing so, an immediate “stay of proceedings” takes effect.This means your unsecured creditors cannot proceed with – or commence – collection efforts against you. It’s also at this point that your creditors can file their claims in bankruptcy against you.
Step #6: Fulfil the obligations that filing for bankruptcy requires of you.
It’s important to comply with all the duties required of you during your bankruptcy, including:
- Making monthly payments to your trustee (intended to cover the costs of your bankruptcy).
- Attending two requisite credit counseling sessions.
- Providing your trustee with the information needed to file your tax returns.
- Helping your trustee sell your assets so that you can pay back your creditors.
- Completing a monthly income statement.
And there you have it. Six easy steps to getting you the fresh start you deserve.
Once your bankruptcy is discharged, which is usually within about 9 months from the time of filing, your debts will be cancelled.
At this time, you’ll probably want to speak with your trustee again about how to ensure this financial trouble doesn’t happen again. A trustee is an excellent source of information when it comes to money management strategies and techniques.
Contact us today for your free initial consultation so we can help assess your options and guide you in choosing the right debt solution for you.