Business Bankruptcy in Canada is primarily governed by the Bankruptcy and Insolvency Act (BIA), a…
The Bankruptcy Assistance Program
The Bankruptcy Assistance Program (BAP) is designed to help make bankruptcy affordable for debtors who cannot afford the fees of a Licensed Insolvency Trustee (LIT). It permits people who do not have the funds to cover the costs of bankruptcy to still be able to access the Canadian bankruptcy system.
Making Bankruptcy an Affordable Option
The Bankruptcy Assistance Program was set up in 1993 under the Bankruptcy and Insolvency Act. It is administered by the Office of the Superintendent of Bankruptcy (OSB) of the Government of Canada. Under the BAP anyone unable to afford the normal cost of filing a personal bankruptcy is able to secure the services of a Licensed Insolvency Trustee – the first necessary step.
The OSB regulates the bankruptcy filing fees. Still, the process itself can be cost-prohibitive for many low-income individuals. In addition to the LIT services fees, there are other fees. These include court filing fees, document filing fees, and any other charges that may be required. These costs can quickly add up. As a result, it can make the bankruptcy process inaccessible to people who need it most.
How Much Does Bankruptcy Cost?
The cost of filing bankruptcy will depend on a number of factors. These include but are not limited to:
- Your net disposable income.
- How much you owe.
- The value of your assets.
- The size of your family.
- Whether you declared bankruptcy in the past.
- The city where you reside.
If you are filing for bankruptcy through the BAP, you will be matched with a Licensed Insolvency Trustee. This will be a Trustee who has signed up to participate in the program. Your Trustee will help you begin the bankruptcy process with only a minimum fee payment.
You can also work out an affordable payment plan spread out over a given period (up to 9 months). In some cases, the BAP may also waive the fees altogether. This happens when it’s abundantly clear that a debtor is unable to put up the necessary amount, even after adjustments.
Qualification Criteria for the Bankruptcy Assistance Program
Not everyone may be eligible for the Bankruptcy Assistance Program. In order to qualify, you’ll need to meet the following requirements:
- You must not be in jail at the time of filing.
- You were not previously or are not currently involved in commercial activity. Specifically, a commercial activity that will require too much administrative or investigative work for the trustee.
- You must not be required to make any surplus income payments. This applies even after you’ve been accepted as being eligible for BAP. If your income increases after you’ve been accepted and you have surplus income, you will no longer be eligible.
This is by no means an exhaustive list. The OSB may have other requirements at the time of applying for the BAP. Be sure to read through all the information provided.
Applying for the Bankruptcy Assistance Program
As long as you qualify for the program, the application process is pretty straightforward. There are 3 simple steps:
Step 1 – Contact the OSB
Visit the OSB website and request for a BAP registration form and information package. You can also contact the OSB by phone 1-877-227-3672 toll-free. Explain the situation and why you need assistance from the program.
Upon receipt of your request, the OSB will send the information package. It will contain the registration form and a list of Licensed Insolvency Trustees in your area. These are LITs that are participating in the assistance program.
Don’t fill out the registration form just yet.
Step 2 – Meet With the Trustees on the List
You’ll need to meet with two LITs on the list. They will assess your financial situation and go through your available options. If you are eligible for the BAP, the trustee will sign the registration form. You will need the signatures of 2 trustees before you can submit the registration form to the OSB. You will then be assigned a trustee that is on the list of those participating in the BAP. They will then assist you with filing a bankruptcy and will notify your creditors.
Step 3 – Submit the Registration Form
You can now submit the completed registration forms signed by the trustees to the OSB. This will attest that you are unable to pay the Trustee’s typical fees and therefore genuinely need financial assistance with your bankruptcy filing.
Once approved, the OSB will mandate a trustee under the BAP to handle your filing. They will also notify credit bureaus of your financial insolvency and your decision to declare bankruptcy. Expect to pay for this service, though at a lower rate than if you were filing without the help of the bankruptcy assistance program.
Should You File for Bankruptcy?
As of 2019, there were over 135,000 filings for insolvency in Canada – 40% of these filing were bankruptcies. According to the Office of the Superintendent of Bankruptcy the top 5 debtor-identified reasons for financial difficulty were:
- Loss of income (37%)
- Medical reasons (23%)
- Relationship breakdowns (15%)
- Business failure (7%)
- Tax liabilities (6%)
If you’ve exhausted every possible option for dealing with debt, bankruptcy may be your best option. Sometimes debt can be so crushing that the only way forward is to shed it all and start over. Bankruptcy can provide that fresh start.
If you are having financial difficulties, we are here to help. Reach out and book a free, confidential appointment. Everyone’s financial situation is unique and that is why we work with you to find the right option. There is no obligation to move forward until you are ready. Contact us today and start your journey to a brighter future.