What is bankruptcy?
Personal bankruptcy is a legal process that leads to the discharging of your debts and allows you to settle what you owe. Only a licensed insolvency trustee (LIT) – previously called trustee in bankruptcy – is authorized to submit your request and administer it with the Office of the Superintendent of Bankruptcy Canada (OSB). Once accepted, bankruptcy allows you to start over and rebuild a sound financial reputation.
The bankruptcy process?
Evaluation of your situation by a Licensed Insolvency Trustee, the only professional authorized to administer the bankruptcy process.
Some of your assets will be seized and sold to pay back your creditors. Some assets are exempt from seizure.
Only one monthly payment until you are discharged from bankruptcy and released from your debts.
Better understanding personal bankruptcy
Preliminary meeting with a licensed insolvency trustee.
During this first meeting, the role of trustees is to understand your financial status and analyze your situation. He or she will then advise you of possible solutions, including bankruptcy. If this is the solution chosen, the trustee will have to determine, according to the law, what property you can keep and which will be seized. He or she will set the number of monthly payments to be made until you are discharged from bankruptcy.
Beyond this process, the trustee will ensure that your rights as a debtor are respected by creditors.
Payments and excess income
It is up to the trustee to set the payment amount you will have to make. To calculate this, you and the trustee will prepare a budget. This step will determine if you are required to make “payments from surplus income”.
Surplus income corresponds to that part of your earnings beyond a certain amount based on the Office of the Superintendent of Bankruptcy (OSB) standards. The OSB’s standards take into consideration the number of members in the family unit.
If it turns out that your income exceeds the amount set by OSB by $200 or more, you are in a surplus income situation. You will be required to add 50% of this amount to your payments.
Once you have signed the assignment prepared by the trustee, the appropriate documents will be sent to your creditors in order to notify them of your personal bankruptcy.
Two mandatory counselling sessions will be planned with your LIT. These sessions will help you manage your budget well and avoid any financial problems.
The topics covered in these sessions follow the directives established by the OSB. You will also have the opportunity to seek advice by asking questions. Your LIT will listen to you and offer you tips that lead to sound financial management. As needed, he or she will recommend corrections to make if you encounter problems.
Once you have met your commitments, the trustee will issue a certificate discharging you from your debts. Bankruptcy is then terminated and your debt problems are erased.
A fresh start after bankruptcy
Your credit file will be affected for seven years if this is your first personal bankruptcy. Things vary for subsequent bankruptcies. You can improve your credit rating by adopting sound consumption habits over the long term. Once free of debt, you will be able to manage your budget well and live without financial stress. It is important that you start using credit according to your capacity to pay and to improve your finances.
What property is excluded from personal bankruptcy?
You can keep some property, even with a personal bankruptcy. For example, you can usually keep most furniture and appliances of your main residence, your clothes and essential work tools. The following table lists property excluded in Quebec and Ontario.
|Ameublement||7 000 $||13 150 $|
|Effets personnels||Exempté à 100%||Exempté à 100%|
|Biens nécessaires pour pallier un handicap ou une maladie||Exempté à 100%||Exempté à 100%|
|Outils et instruments de travail||Exempté à 100%||29 100 $ pour le travail agricole
11 300 $ pour les autres occupations
|Résidence principale (équité)||Pas d’exemption||10 000 $|
|Véhicule motorisé||Exempté à 100% pour un véhicule de promenade, si :|
- Nécessaire au maintien du revenu et pour assurer la subsistance
- Nécessaire à la recherche active d’emploi
- Nécessaire au soin requis par l’état de santé.
Véhicule est saisissable si le transport en commun est disponible ou si un véhicule de moindre valeur peut être utilisé.
|6 600 $|
The benefits of bankruptcy
Is bankruptcy the right solution for you?
Personal bankruptcy may be appropriate for you if:
Other debt solutions have turned out to be ineffective.
The value of all property you own is less than the total value of your debts.
Your creditors have started collection action.
Your salary has been seized.
You are very worried about your situation and want a permanent solution to your debt problems.
Ginsberg Gingras, your debt solution.
You seem to have tried everything to solve your financial problems, but they remain. When you can no longer overcome your debt problems, bankruptcy may be a solution. During an initial, free meeting, a Ginsberg Gingras trustee will analyze your financial situation and will recommend any other available solutions to address your troubles. If bankruptcy is the only option, he or she will support you and answer all your questions. You’ll regain financial freedom and can count on his or her support throughout the process.