filing bankruptcy

What Happens When You File Bankruptcy & How to File Bankruptcy in Canada

The only way to file for bankruptcy in Canada is through a Licensed Insolvency Trustee. They are trained and licensed by the federal government to provide bankruptcy services and it is their role to ensure both the debtor and creditors are treated evenly and fairly.

To receive a Bankruptcy discharge means that you have been released from your obligations to repay the debts that have been included in your Bankruptcy filing. Find out in this short podcast what you can do to rebuild your financial life after Bankruptcy.

The top reasons to file for bankruptcy are:

  • It will eliminate most unsecured debts
  • stops wage garnishments
  • offers credit counselling as part of filing
  • stops collection from creditors

The protection of bankruptcy can be started in 3 easy steps:

  1. Free Debt Assessment: Contact Allan Marshall & Associates Inc. Licensed Insolvency Trustees, to schedule a free consultation to discuss your financial situation. During the consultation we will conduct a thorough review of your current financial situation and discuss all possible options, subject to your specific financial situation. If bankruptcy is a valid option, based on your financial circumstances, a Licensed Insolvency Trustee will help explain the process.
  2. Paperwork:  Allan Marshall & Associates Inc. will prepare the necessary paperwork for signature and file the signed documents with the Official Receiver to activate the bankruptcy and begin creditor protection. When filing for bankruptcy, you will have to sign at least two forms:
    • An “Assignment” form stating that you are handing over all of your property to the trustee for your creditors
    • A “Statement of Affairs” form which is a list of your assets, liabilities, income and expenses.
    • Legal documents are part of the process and although the trustee will help prepare them, you are responsible for the accuracy of the content.
  3. Bankruptcy begins: Your Trustee at Allan Marshall & Associates will notify all creditors of the bankruptcy and a stay of proceedings will protect you from any further legal or collection activity. This begins immediately after your bankruptcy is filed with the government.

During your Bankruptcy

You will be informed of your bankruptcy duties by your trustee and it is your responsibility to perform these duties during your bankruptcy period. They include; making accurate payments, keeping the trustee informed of any changes to your situation, providing monthly budget information, and attending two counselling sessions.

There may be instances during a bankruptcy where the Official Receiver may send a notice to the bankrupt instructing them to appear before him or her for an examination under oath. This often is a random selection, and if you are selected, your trustee at Allan Marshall & Associates will meet you prior to this examination to review the questions you will likely be asked to help you prepare.

Possible causes of your bankruptcy, property and asset questions, and the nature of your debts are examples of the types of questions often asked. If this examination is necessary, your trustee will help go through them with you and assist you during the process.

Another possible meeting during a bankruptcy is a meeting of creditors. They are less frequent and generally only held if you have significant tax debt. After filing for bankruptcy, if a meeting of creditors is called, the bankrupt must attend the meeting.

You would first meet with your trustee who would prepare a report about your assets and liabilities for presentation at the creditors meeting. The creditors may ask questions on specifics of the report and then will vote to either confirm the trustee’s appointment or deny. They may also give directions to the trustee with reference to the administration of the bankruptcy estate.

Again, these meetings are not necessary for every bankruptcy and only held in certain instances.

Completion of Bankruptcy

For a first time bankrupt, there is an automatic discharge of bankruptcy nine months after they became bankrupt unless the trustee recommends a discharge with conditions* or it is opposed by either trustee or the Superintendent of Bankruptcy. Also, if you have surplus income of more than $200 per month, your bankruptcy will be extended to 21 months for a first time bankruptcy.

*It is possible for your trustee, creditor or the superintendent of bankruptcy to oppose your bankruptcy discharge. This usually only happens if one of the following has happened during your bankruptcy period:

  • You refused or did not attend the required counselling sessions
  • Your debt was incurred by gambling.
  • You did not pay the agreed amount of surplus income
  • A Consumer Proposal could have been filed rather than file for bankruptcy.

If this happens, a court hearing will be held and a judge or registrar will determine the conditions which may include a longer bankruptcy period, or you may be required to make additional payments.

Questions? Is filing bankruptcy your best option or do you want to talk to an LIT about other options? Check our FAQ about bankruptcy for more answers or contact us for a free consultation by phone or in person. Call 1-888-371-8800 or email to arrange a meeting. We can help.

About Author

Mark Marshall - Saint John Licensed Insolvency Trustee

Mark Marshall BBA, C.I.R.P, L.I.T

Mark has been working in the Insolvency field since graduating from the University of New Brunswick with a degree in Business Administration (BBA). In 2012 Mark received his Chartered Insolvency & Restructuring Professional (CIRP) designation and attained his license as a Licensed Insolvency Trustee (LIT) in 2013.