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How Do I File for Personal Bankruptcy in Calgary?

Are you struggling to manage your debts and finding your finances are affecting your wellbeing? If your repayments feel too difficult to manage, you may consider filing for personal Bankruptcy. 

While facing debt and bad credit may feel embarrassing and overwhelming, financial struggles aren’t something to be ashamed of. In 2020 alone, even during the Covid-19 pandemic 99,244 insolvencies were filed in Canada with the Office of the Superintendent of Bankruptcy. 

But it’s important to note that while filing for Bankruptcy can offer a fresh start, it isn’t the only way out of debt. Talking through your options with a Licensed Insolvency Trustee (LIT) can help take some weight off your shoulders so you can decide on the best course of action to become debt-free. 

How to File for Bankruptcy in Calgary

If you’re considering filing for Bankruptcy in Calgary, you’ll need to contact a Licensed Insolvency Trustee (LIT) –  previously known as a Bankruptcy Trustee. They provide advice to help you make the right decision on how to handle your debts and they’ll also deal with creditors on your behalf.

Licensed Insolvency Trustees are the only professionals in Canada that can file and administer bankruptcies. Filing for Bankruptcy isn’t something that you can do by yourself or through a lawyer. LITs are trained by the federal government to offer Bankruptcy services and it’s their job to make sure both the debtor and creditor are treated fairly. 

It’s important that you find a Licensed Insolvency Trustee in Calgary that you feel comfortable with. That’s where we come in. Allan Marshall & Associates Inc. is a Licensed Insolvency Trustee firm now located in Alberta. Helping individuals with debt since 1979, They provide you with solutions. .

While filing for Bankruptcy can offer a fresh start, it’s also not your only option. Talking through your situation with a licensed Trustee can help you make the right decision for you and your finances.

 

Who Can File for Bankruptcy in Calgary?

If you are considering filing for personal Bankruptcy, you will need to make sure you meet the following eligibility criteria: 

  • You must be over 18 years old
  • You must be a permanent resident in Canada
  • You must have more than $1,000 of unsecured debt (meaning the debt you owe isn’t secured to a valuable asset you own, like your car or your home)
  • You must be unable to pay back the debt you owe

Even if you meet the above criteria, this doesn’t necessarily mean that Bankruptcy is the right solution for you. It’s important to evaluate your options with your Licensed Insolvency Trustee, who will have the knowledge and experience needed to assess your situation and offer the right advice.

What Options Do I Have?

If you’re looking to assess your options on how to manage your debts, talking to a Licensed Insolvency Trustee can be the first step towards financial clarity – and feeling less overwhelmed.

If you have unpaid debts that you’re struggling to pay off, you have two options available. You can either file a Consumer Proposal, or a personal Bankruptcy: 

A Consumer Proposal 

Not everyone needs to file for Bankruptcy and sometimes a Consumer Proposal is a more suitable option. If you choose to file a Consumer Proposal, you’ll be paying back a percentage of your debt at a lower interest rate for a period of time, to help you get back on track. Usually, a Consumer Proposal involves making a monthly repayment over a period of time for up to five years. 

Personal Bankruptcy

Alternatively, choosing personal Bankruptcy often requires you to give up some of your assets in order to be discharged of your outstanding debt. While Bankruptcy may feel like the right way forward, it’s important to remember its consequences – you may lose some assets (such as your car if it’s worth over a certain value) and it will negatively impact your credit score. 

If you choose to file for Bankruptcy in Calgary, your Bankruptcy duties will be explained to you by your Trustee. It’s important that you perform your duties (such as making payments, keeping your Trustee informed of any changes to your situation and attending counselling sessions) during your Bankruptcy period. 

If you choose to declare Bankruptcy, your trustee will essentially do the hard work for you – from selling your assets to contacting your creditors on your behalf.

How Long Does the Bankruptcy Process Take in Calgary?

Going through the Bankruptcy process can take several months and your Trustee will explain the process step-by-step so you know exactly what is expected of you. 

What Happens to My Debts When I Declare Bankruptcy? 

If you choose to declare Bankruptcy, you surrender your assets in return for a discharge of your debts, meaning most of your debts will be eliminated. It’s important to note that you may still be required to pay your secured debts, such as your mortgage or car finance (where you’re paying a loan for your car).

Unfortunately, some debts cannot be eliminated by Bankruptcy, including: 

  • Court-imposed fines
  • Debt incurred by misrepresentation such as fraud
  • Maintenance payments 
  • Debt for damages imposed by Civil Court (for sexual assault, intentional body harm, or wrongful death)
  • Student loans – if Bankruptcy occurs within seven years of you completing full-time or part-time study

Does Filing for Bankruptcy Affect My Credit Score?

Choosing to eliminate your debts through Bankruptcy can significantly damage your credit rating, as it effectively tells creditors and lenders that you are struggling to manage credit and borrowing. 

Bankruptcy is likely to reduce your credit score to the lowest possible rating by most Canadian credit bureaus. This may affect your borrowing options in the future, including being able to renew your mortgage. So, it’s important that you assess the effects of Bankruptcy carefully before you decide it’s the best option for you. Filing for Bankruptcy can affect both your credit score and your ability to obtain credit and other types of borrowing in the future, once your finances are back on track.

But before you worry that Bankruptcy will permanently damage your credit score, there are ways to strengthen your credit rating in the future. From paying your bills on time to consolidating your existing debt, your credit rating should eventually improve over time if you can demonstrate to creditors that you can manage credit responsibly.

What Is the Difference Between Insolvency and Bankruptcy?

Bankruptcy and insolvency are terms that are often used interchangeably, but they do mean very different things. 

Insolvency refers to a state of financial distress, whereas Bankruptcy is a legal procedure to manage insolvency. Borrowers are considered ‘insolvent’ when they are struggling to keep up with their credit repayments and may choose Bankruptcy as a way to clear their debts, but Bankruptcy isn’t the only option available when you’re in financial difficulty. It’s important to discuss your options with a Licensed Insolvency Trustee, who can offer advice on your debt problems to find a solution that works for you.

How Long Does Bankruptcy Last? 

How long Bankruptcy lasts will depend on your individual circumstances and whether you have declared Bankruptcy in the past, or if this is your first Bankruptcy. 

If this is the first time you’ve declared Bankruptcy, it should last approximately nine months, provided you fulfil all the duties assigned to you by your Licensed Insolvency Trustee. If this is your second Bankruptcy, it’s likely that you will be bankrupt for 24 to 36 months, depending on your personal situation. 

Once you’ve received an absolute discharge from your Bankruptcy, you will no longer be responsible for any of the discharged debts. But it’s important to remember that your Bankruptcy will appear on your credit rating for six to seven years.

Ready to Take Control of Your Debts?

It’s never too late to seek help for your debts. With the help and advice of a Licensed Insolvency Trustee, you’ll have a plan of action in place to help you clear your debts and move towards financial wellbeing.  put things right.

Contact one of our Licensed Insolvency Trustees today – we can help.