What is the main goal of bankruptcy?

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Bankruptcy in Canada offers a fresh start to those struggling with debt. It clears most debt, allowing individuals to rebuild their financial lives and credit scores. Plus, there’s credit counseling to help improve money management skills, setting them up for smarter financial choices ahead.

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Question

What is the main goal of bankruptcy? I’m curious about the primary purpose of bankruptcy and what it’s designed to achieve for individuals in financial trouble.

From: Anonymous Question, Calgary, Alberta (AB)
Topic: Personal Bankruptcy

Debt Insiders Answer

Bankruptcy in Canada is here to lend a helping hand to those honest folks who find themselves overwhelmed by debt. It wipes the slate clean, clearing most of the debt slate, so they can make a fresh start. This process is all about lifting that heavy financial load and giving individuals a chance to rebuild their financial life and credit score. Plus, it offers some handy credit counseling sessions to polish up your money management skills. Think of it as a crash course that gets you equipped to make smarter financial choices down the road.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

The main goal of bankruptcy is to provide relief to individuals who are unable to meet their financial obligations, allowing them to obtain a fresh start. This is designed to achieve a release from most debts, enabling individuals to rebuild their financial lives. This purpose is outlined in the Bankruptcy and Insolvency Act, specifically in Section 2, which describes the objectives of the bankruptcy process, emphasizing the promotion of the orderly and equitable distribution of assets among creditors, as well as providing a mechanism for the honest debtor to discharge their debts.

From: OSB Helper

Related Questions

Here are the top 5 most frequently asked questions related to the main goal of bankruptcy in Canada, presented in a clear and numbered format:

1. What is the main purpose of bankruptcy?

The main purpose of bankruptcy is to provide a fresh start for honest but unfortunate debtors, rehabilitate them, distribute funds to creditors, and investigate the affairs of the debtor[2][4][5].

2. How does bankruptcy help debtors?

Bankruptcy helps debtors by stopping payments to unsecured creditors, halting garnishments and lawsuits, and providing financial counselling to improve financial literacy[1][2][4].

3. What debts are discharged in bankruptcy?

Bankruptcy can discharge unsecured debts such as credit card debt, payday loans, unpaid utility bills, and overdue rent, but not secured debts or debts incurred through fraud[4].

4. How long does bankruptcy last?

The duration of bankruptcy can range from 9 to 36 months, depending on whether it is a first or second bankruptcy and if there are surplus income requirements[4].

5. Do I need to pay upfront to file for bankruptcy?

You do not need to pay much, if any, money upfront to file for bankruptcy; the first consultation with a Licensed Insolvency Trustee is free, and filing fees can be spread out monthly[4].

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

References

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