Business Bankruptcy in Canada is primarily governed by the Bankruptcy and Insolvency Act (BIA), a…
If you reached this page then you are probably wondering how to file for bankruptcy.
In just a few minutes, this video will explain that process. There are really only three steps.
Step one: Research your options. Bankruptcy may not be your only one. For instance, a Consumer Proposal provides you with legal protection from your creditors and may be an easier way to solve your debt problem.
The best way to research your options is by talking to a debt professional that is versed in all the methods of dealing with problem debt, not just one. In Canada that would be a Licensed Insolvency Trustee (LIT).
LITs are licensed by the Canadian government this enables them to advise and support you in a way that no other debt professional can.
So first determine if a bankruptcy is necessary. If it is, you must use a Licensed Insolvency Trustee to file. So it makes sense to start your research there. It means if you discover other solutions are not suitable, you can discuss the implications of bankruptcy with them directly.
Step two: When you have spoken to a Trustee and it appears that bankruptcy is your best route, then they will help you complete a form which will include the following information:
- Your personal information (name, address & date of birth)
- A list of all your creditors
- A list of all your assets
Your LIT will then prepare the necessary paperwork. They will also review the bankruptcy process with you. Now you are ready to file.
Step three: Once you have filed for bankruptcy several things will happen automatically.
- A stay of proceedings – you have legal protection from your creditors
- Calls and letters from collection agencies stop
- Wage garnishments cease – except spousal and child support
- Outstanding tax returns will be filed by your LIT
- You complete monthly income statements for the LIT
A few other things you need to know:
- You are required to attend two credit counselling sessions
- Your LIT will deal with your creditors on your behalf
- You will make monthly payments to cover the cost of administering your estate and payments to your creditors if you have surplus income
Your credit rating will be downgraded as a result of the bankruptcy proceedings. Most personal bankruptcies are discharged in nine months.
At this point, your Licensed Insolvency Trustee can advise you the best and quickest ways to rebuild your credit score.
And that’s it. In as little as nine months you can have your problem debt resolved and be on the way to the ‘fresh start’ you deserve.
So how to file for bankruptcy? Well, first you work out if that is your best option. And how do you discover if that’s the case? Speak to one of our Licensed Insolvency Trustees by arranging a free, no obligation consultation.