How to apply for bankruptcies in Canada?

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Thinking about applying for bankruptcy in Canada? You’re not alone. First, find a Licensed Insolvency Trustee through the Office of the Superintendent of Bankruptcy’s list. Gather your financial documents and explore options like bankruptcy or a consumer proposal. Your LIT will help manage the process.

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Bankruptcy Process Question

How to apply for bankruptcies in Canada? I’m considering bankruptcy and want to know the application process in Canada. What should I be aware of?

From: Anonymous Question
Location: Chatham, Ontario (ON)
Topic: personal bankruptcy

Bankruptcy Process Answer

So, thinking about applying for bankruptcy in Canada? Don’t worry, you’re not alone, and it’s less daunting than you might think! To get started, your first step is to find a Licensed Insolvency Trustee (LIT). These are the folks who know the ins and outs of the process and are authorized to guide you through it. Just head over to the Office of the Superintendent of Bankruptcy’s (OSB) list, and you’ll be on your way.

Once you’ve got your LIT, it’s time for a bit of show-and-tell. Bring along all your financial paperwork—think income statements, bank and credit card histories, loan agreements, and a rundown of your assets. Your LIT will take a good look at these and chat with you about what your best options might be, whether it’s filing for bankruptcy or going for something like a consumer proposal.

If you decide that bankruptcy is your way forward, you’ll be signing off on some mixed paperwork, including an Assignment and a Statement of Affairs, basically giving a full picture of what you own and owe. Your trusty LIT will then handle the official stuff, filing these with the Official Receiver and kicking off the whole bankruptcy process. This provides some breathing space from those persistent creditors.

Don’t forget, there’s a meeting with creditors to attend. But, no need to stress—your LIT will have your back at the meeting. Plus, you’ll need to attend a couple of mandatory counselling sessions to help get your finances back on track. If anything changes in your financial world during this time, keep your LIT in the loop. For a more detailed roadmap, tap into the resources your LIT or the OSB has to offer.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

To apply for bankruptcy in Canada, follow these steps:

1. Eligibility Assessment: Ensure you meet the eligibility requirements outlined in the Bankruptcy and Insolvency Act (RSC 1985, c 47 (2nd Supp)), specifically section 2, which defines who can be a bankrupt, including an individual whose debts exceed $1,000 and who cannot pay them.

2. Consult a Licensed Insolvency Trustee (LIT): You must consult with an LIT, as they are the only professionals who can administer a bankruptcy. The LIT will review your financial situation and assist you in filing.

3. Filing the Application: The LIT will help you complete the necessary forms, including the Statement of Affairs (Form 1 as per the General Rules, C.R.C., c. 368). This document details your financial position, including assets, liabilities, income, and expenses.

4. Submit the Application: Once the forms are completed, your LIT will file the application with the Office of the Superintendent of Bankruptcy (OSB). This includes submitting the necessary documents as outlined in section 5 of the Bankruptcy and Insolvency General Regulations (C.R.C., c. 369).

5. Attend the Creditors’ Meeting: After your bankruptcy application is filed, a meeting may be called where your creditors can ask questions regarding your situation. You are required to attend this meeting, as specified in section 19 of the Bankruptcy and Insolvency Act.

6. Complete Duties and Obligations: Post-filing, you will have certain responsibilities, like attending financial counseling sessions and submitting your monthly income and expenses to the LIT. This is governed by sections 11 and 12 of the General Regulations.

7. Discharge from Bankruptcy: After you meet all obligations, you may apply for discharge. This process is detailed in section 170 of the Bankruptcy and Insolvency Act.

Be aware that bankruptcy will impact your credit rating for a significant period and should be considered in the context of your overall financial situation.

From: OSB Helper

Related Questions

Here are the top 5 most frequently asked questions related to applying for bankruptcy, based on the provided sources and general online trends:

1. Will I lose my house if I file for bankruptcy?

• Not likely, depending on the amount of equity you have in the home[1].

2. What happens when you claim bankruptcy?

• A Licensed Insolvency Trustee files the paperwork, and you will submit monthly income and expense statements, attend financial counseling sessions, and eventually receive a discharge[1][2].

3. How long does bankruptcy last?

• If it is your first bankruptcy, you could be discharged in as little as nine months, or 21 months if you have surplus income[1][5].

4. When will creditors stop calling?

• Creditors must stop contacting you directly once the Trustee files the bankruptcy documents, due to a legal “Stay of Proceedings”[1][5].

5. What debts are unaffected by bankruptcy?

• Debts such as child support or alimony are not dischargeable in bankruptcy and payments will continue[1][5].

If you have a question about debt see our debt questions or ask your own debt related question.

References

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