How to file bankruptcies?

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Thinking of going bankrupt in Canada? First, make sure you qualify: you need at least $1,000 in debt and live or own property there. Connect with a Licensed Insolvency Trustee for free advice. If bankruptcy is right, gather documents, sign forms, and stop creditors. Attend 2 counseling sessions and get your discharge. You’re back on track!

Reach out via phone, text or live chat if you have any questions.

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Bankruptcy Process Question

How to file bankruptcies? I’m interested in the process of filing for bankruptcy and what I need to know to get started.

From: Anonymous Question
Location: Whitby, Ontario (ON)
Category: personal bankruptcy

Bankruptcy Process Answer

Considering filing for bankruptcy in Canada? First things first, check if you qualify. To be in the game, you’ll need debts of at least $1,000 and either live in Canada or own property there. Plus, you can’t already be bankrupt and must be in over your head financially. Once you tick these boxes, it’s time to get the ball rolling by chatting with a Licensed Insolvency Trustee. They’ll give you a free analysis of your financial puzzle and outline your options.

If bankruptcy seems like the right path, you’ll gather some paperwork—think pay stubs, bank records, and loan papers. Next up, you’ll sign off on important forms, like the Assignment and Statement of Affairs, which officially kick off your bankruptcy filing. With everything signed and sealed, your trustee will send the paperwork to the Official Receiver or the Office of the Superintendent of Bankruptcy (OSB). This step puts the brakes on creditors and declares you officially bankrupt.

You’ll then have a sit-down with your creditors and stay on top of your duties, which include reporting any changes in your financial situation. Don’t forget those two must-attend debt counseling sessions with the LIT, designed to help you bounce back. After you’ve met all the requirements, you’ll get your Certificate of Discharge, wiping away most debts and letting you hit the restart button on your financial journey.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

To file for bankruptcy in Canada, you need to follow these steps:

1. Evaluate Your Situation: Determine if bankruptcy is the best option for you. Consider living expenses, debts, and whether there are alternatives such as consumer proposals or debt management plans.

2. Choose a Licensed Insolvency Trustee (LIT): You must work with a LIT who is authorized to administer bankruptcies. They will guide you through the process.

3. Prepare Your Financial Information: Collect all relevant financial information, including income, assets, debts, and expenses. This information is necessary for the LIT to assess your situation and prepare the required documentation.

4. File the Bankruptcy Application: Your LIT will prepare the necessary paperwork to file for bankruptcy in accordance with Section 9 of the Bankruptcy and Insolvency Act (RSC 1985, c 11, s 2). You will need to complete a Statement of Affairs which provides details on your financial situation.

5. Attend a Credit Counselling Session: You must complete two credit counselling sessions with your LIT while in bankruptcy, designed to educate you about managing debt.

6. Receive Your Bankruptcy Orders: Once your application is filed, the LIT will send a Notice of Bankruptcy to your creditors, and your debts will be legally suspended.

7. Complete Your Duties: You must comply with the requirements set forth by the Bankruptcy and Insolvency Act, which include making payments if required, attending counselling sessions, and submitting monthly income statements.

8. Await Discharge: After completing all obligations, you can apply for discharge from bankruptcy, which can take place after a certain period of time depending on your specific circumstances as outlined in Section 130 of the Bankruptcy and Insolvency Act.

Review Section 43-57 or Section 128-130 of the Bankruptcy and Insolvency Act as well as the related regulations in the cited documents for further details on specific requirements and procedures.

From: OSB Helper

Related Questions to Licensed Insolvency Trustee

Here are the top 5 most frequently asked questions related to filing for bankruptcy in Canada, along with brief answers:

1. How do I file for bankruptcy?

To file for bankruptcy, you need to find a Licensed Insolvency Trustee (LIT), provide financial documents, sign the necessary paperwork, and file the documents with the Office of the Superintendent of Bankruptcy[1][4].

2. What are the steps involved in the bankruptcy process?

The steps include finding a Licensed Insolvency Trustee, assessing your financial situation, filing the bankruptcy forms, attending a meeting of creditors, liquidating non-exempt assets, reporting any changes, attending counselling sessions, and obtaining a discharge from bankruptcy[1][4].

3. What is the difference between a consumer proposal and bankruptcy?

A consumer proposal involves making an agreement to pay a percentage of your debts or extend the payment period, while bankruptcy involves surrendering assets to a trustee to be liquidated and distributed to creditors[3].

4. What forms do I need to sign to declare bankruptcy?

You need to sign an “Assignment” and a “Statement of Affairs,” which include details of your assets, liabilities, income, and expenses, and other relevant information[4].

5. What are the duties and responsibilities of a Licensed Insolvency Trustee in bankruptcy?

A Licensed Insolvency Trustee assesses your financial situation, prepares and files bankruptcy documents, notifies creditors, liquidates non-exempt assets, ensures completion of duties, and prepares a final accounting for creditors[2][5].

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

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