Why am I still receiving calls from creditors after I filed for bankruptcy?

Upon filing, we notify all creditors, listed on your statement of affairs. In 99% of the cases, all calls and letters from creditors should stop within a week of filing for bankruptcy. (We have to allow some time for creditors to receive notice and update their records.)

  • If after one week from the date of filing you continue to receive calls or letters we ask that you notify our office so we can contact that specific creditor again
  • In the case of phone calls, we ask you to notify us of the name, phone number and company of the person calling so we can contact them directly.

What about my RRSP’s ?

RRSP’s are exempt assets.   RRSP’s are yours to keep and are protected from your creditors with the exception of any new contributions in the twelve months leading up to bankruptcy.

What happens to Income tax refunds, GST cheques and Child Tax Credits received from Revenue Canada when someone is in bankruptcy?

Income tax refunds – Tax refunds for tax years prior to bankruptcy or the year of bankruptcy would be forwarded by the government to your trustee. These refunds form property of the estate and would be available for distribution as a dividend to unsecured creditors.

  • GST Cheques – GST will automatically be sent to your trustee while you remain in bankruptcy. Future GST cheques will be sent directly to the individual, by the government if you qualify to receive them, once you have been released from bankruptcy.
  • Child Tax Benefit / Universal Child Tax Benefit – These cheques will continue to be sent directly to the bankrupt as a part of their income.

Will I lose my vehicle if I file for bankruptcy?

In most cases a bankrupt is able to keep their vehicle. Vehicles typically fall into two categories:

  • Vehicles that still have money owing on them.
    • To keep these vehicles the bankrupt will need the car payment to be up to date when they go into bankruptcy and keep future payments up to date or the bank or financing company will seize the vehicle. If the payments are up to date the bank cannot seize the vehicle or call the loan. The bankrupt can however, at the beginning of the bankruptcy, choose to voluntarily return the vehicle and include the car loan in the bankruptcy.
  • Vehicles that are owned outright.
    • A vehicle that is owned outright may still be retained by an individual filing for bankruptcy, if the vehicle is needed for work and/or medical reasons and is worth less than a specified dollar value. The specified dollar values are called exemption limits and are different for each province.

Please refer to the section on bankruptcy for more information on exemptions.

Will bankruptcy release me from Income tax and other government debts?

Yes, Personal Income tax debts, GST and director’s liability for a corporation’s government debts may all be discharged through bankruptcy.

Will my wages be garnished after I file for bankruptcy?

Most garnishees are stopped by bankruptcy.  However, certain garnishments continue such as alimony and child support.
Other garnishments such as Revenue Canada for income tax will STOP as soon as you file for bankruptcy protection.

Would I still handle my own money and can I still have my bank account?

Yes, a bankrupt continues to receive their own pay cheque, have their own bank account and pay their own monthly bills, subject to any required payments under the bankruptcy and insolvency act.
Even people who are having financial problems may still have a bank account.

  • We do suggest you open an account and keep your money in a bank that you do not owe any money.
  • If you keep your account at the same bank that you owe (For example overdraft, lines of credit and visa) the bank can apply offset and seize any money you have in your accounts and apply it to monies you owe the bank.

Will my employer know if I file for bankruptcy?

Your employer would not be notified by the trustee about your bankruptcy, unless:
You owe your employer money. Then they would be notified along with all your other creditors.
You are unable to provide your trustee with the required information (pay stubs and T4’s) necessary to file your income tax.

When in bankruptcy can I continue to pay family & friends?

No, loans to family and friends do not have any special standing in bankruptcy and will not be treated any better than regular unsecured creditors.  While in bankruptcy you are responsible to pay ongoing living expenses and secured creditors in order to receive continued use of the utility or secured asset

How long will it take to re-establish credit after bankruptcy?

The ability to reestablish credit will depend on a number of factors. Many of which have nothing to do with having filed for bankruptcy. Some of the items considered with applying for credit are:

  • Do you have a full time job?
  • How much do you make?
  • What is your debt equity ratio?
  • What have you done since filing for bankruptcy?
  • Are your utilities up to date or are they in arrears?
  • What is the loan for? (It is often easier to borrow for the purchase of a car, as opposed to an unsecured loan to take a vacation.)
  • Often the best way to look at applying for credit after bankruptcy is to approach it as if you were 18 starting to establish credit for the first time.
  • Although starting over can take some time and effort to get reestablished it is still better then struggling with debts you will never be able to pay off on your own.

How does bankruptcy affect my credit rating?

The fact of bankruptcy will remain on an individual’s public record for up to 7 years although most credit bureaus remove reference to a first time bankruptcy after only 6 years.  The credit rating associated with bankruptcy is R9 and is the same credit rating used if your debts have been put into collection, your debt is more than 120 days past due and considered as bad debt or you moved and did not provide a new address.