What is a
What is a personal bankruptcy?
it is the surrender of seizable and realizable assets to your creditors in exchange for the discharge of all debts (some exceptions prescribed by law).
We determine the assets that you will be unable to keep. As a general rule, there are very few that you will not be able to keep.
If the consequences of a personal bankruptcy would mean the loss of an asset that you want to keep, the consumer proposal would be an alternative to avoid this end result.
A good option for you if:
- You cannot afford a debt consolidation or a viable proposal.
- You have little or no equity in your assets.
- You want an expeditious fresh start.
WHAT ASSETS CAN I KEEP?
WHAT ASSETS CAN I KEEP?
- Your home if there is little or no equity (equity = difference between fair market value and your mortgage) and provided you are not in default on your mortgage.
- Your car if there is little or no equity and provided you are not in default on your car loan. If your car is entirely paid, it could be exempt from seizure. If not, we can make arrangements for you to keep it.
- Your provincial income tax refund.
- Furniture from the man residence for household use valued up to $ 7,000 (liquidation value).
- Work tools necessary for the personal use for a professional activity.
- In certain cases provided by law, a motor vehicle.
of our clients are discharged after only 9 months.
steps to free yourself by filing for bankruptcy
steps to free yourself by filing for bankruptcy
- An initial meeting with your counsellor to discuss your options.
- Signing of documents and the start of the protection provided by law.
- Once the final payment is made, you are discharged of all your debts (some exceptions prescribed by law)
Vos questionsAsk your questions
Am I discharged from all of my debts ?
The discharge from bankruptcy will erase all debts, except those listed in Section 178 of the Act which reads as follows:
- Any fine or penalty imposed by a court in respect of an offence, or any debt arising out a recognizance or bail;
- Any award of damages by a court in respect of bodily harm intentionally inflicted, or sexual assault, or wrongful death resulting therefrom;
- Any debt or liability for alimony;
- Any debt or liability under an order for the maintenance and support of a spouse or child living apart from the bankrupt;
- Any debt or liability arising out of fraud, embezzlement, misappropriation while acting in a fiduciary capacity;
- Any debt or liability for obtaining property by false pretences or fraudulent misrepresentation;
- Any liability for the dividend that a creditor would have been entitled to receive on any provable claim not disclosed to the trustee;
- Any debt or obligation in respect of a student loan guaranteed by the government where the date of bankruptcy occurred before the date on which the bankrupt ceased to be a student or within 7 years after the date on which the bankrupt ceased to be student;
- Any debt for interest owed on any of the above noted non-dischargeable debts.
Can I keep one or more of my credit cards ?
For how many months am I in bankruptcy ?
The time limits under the new Act that are applicable to bankruptcies filed after September 18, 2009 are as follows:
1) 1st bankruptcy (automatic discharge in the absence of opposition)
- No surplus income* = 9 months
- With surplus income* = 21 months
2) 2nd bankruptcy (automatic discharge in the absence of opposition)
- No surplus income* = 24 months
- With surplus income* = 36 months
3) 3rd bankruptcy or more, 12 months after the date of bankruptcy
- Mandatory Court hearing in the 12th month
- It is possible that the Court extends the bankruptcy
4) Bankruptcies with significant tax debts ($ 200,000 or more representing at least 75% of total debt)
- Mandatory Court hearing
- Varying Conditions of release shall be imposed by the Court according to the circumstances in each case.
The new Act provides that if you have surplus income at any time during your bankruptcy, the duration of your bankruptcy will be extended by the number of months mentioned above. For example, it may be that at the time when you go into bankruptcy, the expected duration may be 9 months (for a first bankruptcy without surplus income) or 24 months for a second bankruptcy, but that during your bankruptcy, following an increase in salary, a bonus or a change in your family situation, the average of your income becomes surplus income. In this event, your bankruptcy would then be extended for the time mentioned above, or for a further twelve months for a total of 21 months.
Conversely, if you started your bankruptcy with surplus income and then your income diminished during the first 6 months, or the first 21 months for a second bankruptcy, so that you no longer have surplus income, the duration of your bankruptcy will be reduced from 21 months to 9 months (for a first) and from 36 months to 24 months (for a second).
Finally, note that the trustee has the obligation to require that you show proof of your income once at the beginning of your application and again two months before your release.Back to questions
What are the costs of a bankruptcy ?
What is surplus income ?
Is there a minimum amount of debt required before I can declare bankruptcy ?
Can I declare bankruptcy if I am unemployed ?
Can my creditors refuse my bankruptcy ?
Can I declare bankruptcy for only some of my debt ?
Student loans. What happens to my student loan if I go bankrupt ?
Can my RRSP or my pension plan be seized?
There are many types of RRSP’s available to the consumer, and to answer the question, the individual contracts must be closely analyzed by the trustee. One must be aware, however, that the majority of RRSP’s can be seized with the exception of those mentioned below:
For all cases filed from July 7, 2008, all types of RRSPs are non-seizable. Only the contributions made during the 12 months prior to your bankruptcy may be seized, and only if they were made in RRSP plans that would have been seizable in the absence of a bankruptcy or proposal.
For any more accurate assessment, we would have to review all documentation related to your RRSP.Back to questions
What property may I keep if I go bankrupt ?
Property that you may keep and that cannot be seized are provided for in articles 694 to 701 of the New Code of civil procedure and, in general, include primarily the following items, which is not all inclusive:
- The moveable property which furnishes the main residence, used by and necessary for the life of the household, up to a market value of $7,000.
- The food and clothing.
- The tools and instruments needed for the personal exercise of a professional activity (ex. Mechanic’s tools).
- The personal documents and family portraits.
- The alimony and child support paid to you.
- The equipment necessary for a handicapped person to get around. All goods received in an inheritance (provide that the last will contains the appropriate covenant).
- CSST and invalidity indemnities.
What happens if I used my credit cards just before declaring bankruptcy ?
Can I keep one or more of my credit cards ?
Will I be allowed to operate my business ?
The only requirement is that a business, whose sole proprietor is in bankruptcy, must give notice to those with whom he deals that he is in personal bankruptcy. On the other hand, you no longer can be an administrator of an incorporated company so long as you are not discharged from your bankruptcy.
Back to questions
Am I entitled to have or open a bank account ?
Under the Act, you have the right to have or open a personal bank account even if:
- You are unemployed;
- You do not have money to deposit in it immediately;
- You have declared bankruptcy.
However, the Bank is entitled to refuse to open an account if:
- It believes that you will use the account in an illegal or fraudulent manner;
- You have ever engaged in illegal or fraudulent activity at a bank over the past seven years;
- You have provided it with misleading information;
- You do not agree that it verify the information described above;
- You are unable to present proper identification.
If you are dissatisfied with any decision or action taken by a financial institution, you can complain to the Ombudsman for the bank. His role is to analyze the situation objectively and make corrections when necessary. Here’s how to reach them:
CIBC Bank : 1-800-308-6859
Bank of Montreal : 1-800-371-2541
Laurentian Bank : 1-800-479-1244
National Bank : 1-888-300-9004
Royal Bank : 1-800-769-2542
Scotia Bank : 1-800-785-8772
TD Bank : 1-888-361-0319
Desjardins Group : 514-281-7434
Ombudsman of the Canadian Bankers Association : 1-888-451-4519
Financial Consumer Agency of Canada (FCAC) : 1-866-461-2232Back to questions
Do I have to go bankrupt if my spouse goes bankrupt ?
If my spouse is paying alimony and goes bankrupt, what happens to the alimony obligation ?
On the other hand, if there are arrears in alimony payments, are these debts erased in bankruptcy?
Can a bankruptcy stop legal proceedings including the seizure of my property or the garnishment of my wages ?
In declaring bankruptcy or filing a consumer proposal, you place yourself under the “protection of the law”. All seizures or judicial proceedings are stopped except for three exceptions:
- A secured creditor may continue his proceedings (ex. a mortgage creditor), but the proceedings are limited to the repossession the assets subject to a lien (ex. mortgage, conditional sales contract);
- A garnishment of wages for alimony or child support payments;
- A creditor who has obtained a judgement of the Court. This is an extremely rare exception and usually involves fraud.
What will happen to my income tax refunds, and does the fact that I filed a Bankruptcy affect the filing of my personal tax returns?
Provincial: The Provincial income tax refunds are not seizable by the Trustee, which means that you may keep the refunds despite the fact that you filed a Bankruptcy. However, you should be aware that if there is an amount owing to the Agence du revenu du Québec (the “ARQ”) for a period prior to the date of the Bankruptcy, the ARQ may apply your income tax refunds against any amount owing for a period prior to the Bankruptcy, but not for any period subsequent to the Bankruptcy.
Federal: The Federal income tax refunds for the periods prior to the Bankruptcy, as well as for the calendar year of the Bankruptcy, will be seized for the benefit of your creditors. The Federal income tax refunds for the years subsequent to the Bankruptcy may not be seized by the Trustee.
The filing of your income tax returns: In the event that you file a Bankruptcy, you may consider this a fresh start, and you will be entitled to include any income tax debt owing up to the date of the Bankruptcy. As such, there will be two (2) income tax returns to be filed, the first for the period from the 1 st of January to the day prior to the date of the Bankruptcy, and the second, for the period from the date of the Bankruptcy to December 31. The Trustee will prepare the income tax returns, free of charge, (exceptions may apply).Back to questions
Do I have a surplus income?
To determine if you have surplus income, we must add net income from all sources (work, child benefits, child support, retirement income, bonus, income tax returns, etc) earned or received during the bankruptcy for all the members of the family unit. We can deduct the following expenses:
- Child support payment
- Child care expenses;
- Expenses associated with a medical condition (or handicap);
- Expenses permitted by the Income Tax Act that are a condition of employment;
Finally, we can deduct the following amounts considered as being essential to cover basic necessities. For example:
1 person: 2,121 $/month
2 persons: 2,640 $/month
3 persons: 3,246 $/month
4 persons: 3,941 $/month
5 persons: 4,470 $/month
(2017 grid indexed each year)
The exact calculations may involve other more complex factors. The precise calculations will be done during your first information session with an administrator and you will have the necessary information to make an informed decision.
(For more details, please consult the official Office of the Superintendant of Bankruptcy Directive: https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br03249.html)Back to questions