Feeling defeated over your finances? If your credit cards are maxed out and you’re unable to pay your monthly bills, you might consider filing for personal bankruptcy in Vancouver. While most people think of Bankruptcy as the last resort, it can discharge you from most of your unsecured debts.
After declaring Bankruptcy, you immediately gain protection from wage garnishment, collections calls, and creditor lawsuits. While the situation is not ideal, Bankruptcy can provide you with the second chance you need and an overall feeling of relief.
Who Should File For Personal Bankruptcy in Vancouver?
If you’re questioning whether to file for personal Bankruptcy, you should contact a Licensed Insolvency Trustee. An LIT is the only professional in Canada authorized to administer federally regulated debt relief programs, including personal Bankruptcy and Consumer Proposals.
While Bankruptcy is one of the most well-known debt help options, it is not the only one. Your LIT can assess your finances to determine if Bankruptcy is the right debt relief option for you.
Who Qualifies For Personal Bankruptcy in Vancouver?
To qualify for personal Bankruptcy, you must meet the following criteria:
- Reside, do business, or own Canadian property
- Owe at least $1,000
- Unable to pay your debts on time
- Debts exceed the fair market value of your assets
When you meet with an LIT, they will help you determine if you are eligible to file for personal Bankruptcy and if it is the right choice. Just because you qualify to file for Bankruptcy doesn’t mean it is your best debt alternative.
What Happens When You File For Personal Bankruptcy in Vancouver?
If you qualify for Bankruptcy and decide to move forward, you will work with your LIT to complete the necessary paperwork. Your LIT will file your documents with the Office of the Superintendent of Bankruptcy and you will be declared bankrupt.
Once declaring Bankruptcy, you no longer have to communicate directly with your creditors, your LIT will do this for you. At this time you can also stop making payments directly to your creditors, and any wage garnishment, collection phone calls, and creditor lawsuits will stop.
Do You Have to Sell All of Your Assets?
Declaring Bankruptcy does not mean you have to surrender all of your assets. The Bankruptcy and Insolvency Act lists three types of exemptions:
- Property held in trust for another person
- GST credit payments and other payments related to your family’s essential needs
- Other exempt property defined by your province or territory
Examples of Vancouver Bankruptcy exemptions include:
- A vehicle worth less than $5,000 (this amount is reduced to $2,000 if you owe family or child support payments).
- Tools used to earn a living up to $10,000.
- Unsecured furniture and household appliances up to $4,000.
Your LIT will sell your eligible assets to try and recoup money to pay your creditors.
What Type of Debt is Eliminated?
When you are discharged from Bankruptcy, many of your unsecured debts are eliminated, including:
- Credit cards
- Installment loans
- Lines of credit
- Payday loans
- Personal loans
- Student loans (if you’ve been out of school for seven years or more)
Secured debts such as your car loan or mortgage are not eliminated in Bankruptcy. Certain unsecured debts are also not included in Bankruptcy, including:
- Child support
- Student loans (if it’s been less than seven years)
- Court-ordered fines or penalties
- Debts from fraud
How Long Will The Bankruptcy Process Take?
For a first-time Bankruptcy, the process can be completed in as little as nine months after filing. Subsequent Bankruptcies can be completed in as little as 24 months after filing. If you owe surplus income greater than $200 per month, this extends the time it takes to complete the Bankruptcy process.
What Happens to Your Credit Score When You Declare Bankruptcy?
After declaring Bankruptcy, you’re typically assigned the lowest credit rating (R9) and this can impact your ability to borrow. A first-time Bankruptcy will remain on your credit report for up to seven years. Subsequent Bankruptcies will stay on your report for 14 years. Even once your Bankruptcy is wiped from your report it can take time to reestablish your credit.
Alternatives to Personal Bankruptcy in Vancouver
Depending on your personal situation, you might have other debt help options.
The purpose of credit counselling is to help you find solutions to your debt problems. If you’re struggling to manage your money, your LIT can work with you to create a budget. If you have issues with credit, you can discuss appropriate credit usage. Your LIT can also explain the different debt relief options available to help you manage your debt.
A Consumer Proposal is a formal agreement between you and your creditors to repay a percentage of the debt you owe, extend the time you have to pay, or both. A Licensed Insolvency Trustee is the only professional in Canada who can administer a Consumer Proposal. If you qualify for a proposal, it is typically preferred to Bankruptcy as it allows you to keep more of your assets.
Work With a Bankruptcy Trustee in Vancouver
If you’re dealing with insolvency in Vancouver, and you’re not sure what to do, we are here to help. At Allan Marshall & Associated our LITs are dedicated to answering all of your questions and helping you find relief from your debt. When you’re ready to reach out, contact us at 1-888-371-8900 or fill out our online contact form for a free, no-obligation consultation.