For most people, declaring Bankruptcy sounds like one of the scariest financial decisions. While no one wants to file for Bankruptcy, it can provide a fresh financial start. The purpose of Bankruptcy in British Columbia is to give honest Canadians who are down on their luck a second chance. Whether you’ve lost a job, experienced illness or injury, or just went through a divorce, we understand that debt happens, and we can help.
If you are dealing with a significant amount of debt and you’re contemplating Bankruptcy, speak with a Bankruptcy Trustee in British Columbia today to see if it’s the right choice for you.
Bankruptcy is only one of the debt relief options available. This podcast explores other debt solutions.
Bankruptcy British Columbia – Is it Right For You?
Bankruptcy is a legal process that can offer relief from most of your debts. If you are unable to keep up with your bills, and your debt is causing constant stress, Bankruptcy might be the right option.
To confirm if Bankruptcy is the best path forward, speak with a British Columbia Licensed Insolvency Trustee (LIT). An LIT is the only professional in Canada authorized to administer government-regulated insolvency proceedings such as a Bankruptcy or Consumer Proposal.
Filing for Bankruptcy in British Columbia
If you and your LIT decide to move forward with Bankruptcy, your LIT will file Bankruptcy documents with the Office of the Superintendent of Bankruptcy (OSB). At this time, you will be declared bankrupt and can stop making debt payments to your unsecured creditors. Any wage garnishment or creditor lawsuits against you will stop.
Throughout the Bankruptcy process, your LIT will deal with your creditors on your behalf. Your LIT is also responsible for selling your assets and distributing the money to your creditors. You also have certain responsibilities to follow, which include:
- Disclosing any information about your assets and bets to your LIT
- Telling your LIT if you’ve sold or transferred any property in the last few years
- Handing over your credit cards to your LIT
- Attend two counselling sessions
- Informing your LIT in writing if your address changes
Who can file for Bankruptcy in British Columbia?
To qualify for Bankruptcy in British Columbia, you must be unable to pay your bills (insolvent) and you must owe at least $1,000 in unsecured debt.
What debts are included in Bankruptcy?
Bankruptcy will eliminate most of your unsecured debts, including:
- Credit cards
- Installment loans
- Lines of credit
- Medical bills
- Payday loans
- Personal loans
- Student loans (if you’ve been out of school for seven years or more)
What debts are not included in Bankruptcy?
There are certain types of debts that are excluded from Bankruptcy by law, these include:
- Alimony
- Child support payments
- Student loans (if it’s been less than seven years since you stopped being a student)
- Court-ordered fines or penalties
- Debts from fraud
How will Bankruptcy impact your credit score?
When you declare Bankruptcy, you are assigned the lowest possible credit rating. This can impact your ability to obtain credit until it is removed from your credit report. Then you will have to rebuild your credit score. A first Bankruptcy will stay on your credit report for up to seven years. Subsequent Bankruptcies will stay on your credit report for 14 years.
How much does it cost to file for Bankruptcy?
The initial consultation with your LIT to determine what debt solution is most appropriate is completely free. If you move forward with Bankruptcy, the cost of filing and the Trustee’s fees are regulated by the Bankruptcy and Insolvency Act. You might also have to make surplus income payments.
Surplus income is the amount of income a person who has declared Bankruptcy makes that exceeds the amount they need to live. This amount is calculated based on standards from the OSB.
Alternatives to Bankruptcy British Columbia
While Bankruptcy might be the debt solution you need to get a fresh financial start, you might have other options. Depending on your specific debt situation, your LIT might suggest an alternative solution, such as credit counselling or a Consumer Proposal.
Credit counselling
Credit counselling involves working with an LIT to improve your financial knowledge and skills.
Your counsellor might teach you how to build a budget or properly manage credit. The purpose of credit counselling is to better understand how you got into debt, so you can prevent it from happening again in the future.
Debt management plan
Your credit counsellor can also determine if you are a good candidate for a debt management plan. In a debt management plan, your credit card debt is consolidated into monthly payments based on what you can afford. Your counsellor can try to negotiate with your creditors to reduce or eliminate your interest payments. It is up to your creditors to decide if they want to participate as this plan is totally voluntary.
Consumer proposal
Like Bankruptcy, a Consumer Proposal is a legal process that can only be administered by an LIT. In a proposal, you work with your LIT to create an offer to your creditors to pay a percentage of your debt, extend the time you have to pay off your debt, or both. The main difference between a Consumer Proposal and Bankruptcy is you get to keep more of your assets in a Proposal.
Contact a British Columbia Licensed Insolvency Trustee
If you’re on the brink of insolvency and you’re contemplating Bankruptcy in British Columbia, reach out to an LIT at Allan Marshall & Associates. An LIT is the only professional in Canada that can provide you with a full spectrum of debt relief solutions.
At Allan Marshall & Associates, we can work with you to determine if Bankruptcy is the right path forward, or if you have other options. If you are tired of being stuck in a cycle of debt and stress, an LIT can help you find a fresh start. You don’t have to do this alone. For a free, no-obligation consultation, give us a call at 1-888-371-8900 or fill out our online contact form.
