Personal Bankruptcy

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 offense, 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 pretenses 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.

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 7 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.

No. If you declare bankruptcy, you do so for all of your debts. However, if for any reason, moral or otherwise, you wish to repay a debt to a family member or close friend, although your are not obliged to do so, you may repay such a debt after your discharge from bankruptcy.

Yes. Often times, people with financial problems are out of work, and nothing can prevent them from declaring bankruptcy. Nevertheless, you will have to make monthly payments, to the Trustee, during the nine month period of the bankruptcy. (Please refer to the question “What is the duration of a bankruptcy?”

Yes. Situations where someone loses a property unintentionally or without prior knowledge are rare.

Discover all the details about your car here.

See what impact bankruptcy could have on your house here.

If you declare bankruptcy, you are required to turn in all of your credit cards, whether or not amounts are owed.

On the other hand, although you are not required to turn in your credit cards if you file a proposal, the issuer will likely cancel said card if there is an amount owed or if the issuer is otherwise informed of your proposal.

No, only the Court can annul a bankruptcy at the request of a creditor. This procedure is exceptional rare and hardly ever seen.

However, in certain circumstances, creditors may oppose your discharge from bankruptcy for the following reasons: if the creditors can prove that, prior to your bankruptcy, you acted irresponsibly to their detriment, that you sold, disposed of, or hid some of your assets, or if you continued to increase your debts knowing that you would be declaring bankruptcy.

In such cases, the court can suspend your discharge from bankruptcy and/or demand that additional amounts be paid to the bankruptcy as a condition of your discharge. These oppositions by the creditors are rare but still possible.

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.

The Office of the Superintendent of Bankruptcy, a federal government agency, has addressed this issue and confirmed that an overpayment of the CERB is a debt that can be included in a bankruptcy.

However, if the government believes that an individual was not eligible to receive the CERB, it can petition the court to have the debt declared non-dischargeable due to false representation.

However, due to the number of cases involved (over 800,000 according to the latest estimates), the costs associated with such a petition, and the burden of proof the government must meet to convince a court that there was a false representation, these types of petitions are extremely rare, and to date, we have not had any in our files.

The fact that your spouse declares bankruptcy does not necessarily mean that you must also declare bankruptcy. Should the question arise, the trustee will verify whether or not you are jointly responsible for any of your spouse’s debts or obligations. In the event that you are jointly responsible for an unpaid debt or obligation, the creditors may demand, from you, full payment of the debt or obligation, unless you also file a proposal or bankruptcy.

Yes, by filing for bankruptcy, you immediately become protected by law. Thus, any seizure or legal proceedings are stopped, except for 3 exceptions:

• Secured creditors (e.g., mortgage lenders) can initiate or continue legal action if you are in default under your contract. However, this action is limited to the repossession of the property, and they cannot hold you responsible for any monetary loss they incur as a result of the repossession.
• A garnishment for alimony that you must pay.
• If the creditor has obtained permission from the court. This situation is very rare and usually occurs when the debt is of a fraudulent nature.

We invite you to read our article to learn more about the factors that influence the duration of a bankruptcy.

With a bankruptcy, the credit rating is R9 for 6 years after your bankruptcy discharge (7 years for TransUnion). Thus, bankruptcy impacts your credit report, but often it is already affected by excessive debt or past mistakes that remain on your record for 6 years. One does not file for bankruptcy because everything is going well and they simply want to save money. It is done when the current state of one’s finances is no longer viable, and month after month, one sinks further into debt. As long as your debt persists, you will not be able to improve your credit report.

To break the cycle of debt, sometimes the best or only way out is bankruptcy. As soon as the bankruptcy is over, your debts will be erased, and you can then start on a solid foundation and improve your credit report.

If you are facing financial difficulties that require you to consider bankruptcy as a solution, here are the steps you will need to follow:

1. Contact a personal finance advisor at Jean Fortin for a free consultation, either remotely or in person, according to your preference.
2. Through the questions we will ask you and the documents we will request from you, we will conduct a complete analysis of your financial situation.
3. If bankruptcy proves to be the best or only solution, we will prepare the necessary documents to file your bankruptcy case and place you under the protection of the law.
4. From that moment on, your creditors will no longer be allowed to contact you because we will take charge of your case.
5. Along the way, you will have to attend two meetings (remotely or in person) with your advisor to help you establish and follow your budget, discuss tips for rebuilding your credit, analyze the causes of your financial difficulties to avoid them in the future when possible, and to answer any questions you may have about the ‘post-bankruptcy’ period.
6. From the moment you file for bankruptcy, you will no longer be required to pay your credit cards, lines of credit, and personal loans, but you will have to make monthly contributions to us for the benefit of your creditors. These contributions are based on your financial capacity and take into account your family, personal, and professional obligations.
7. At the end of the process, the duration of which varies depending on whether it is your first bankruptcy or not and your income, you will be discharged from your debts and ready for a fresh start on solid financial footing.

We invite you to review in detail the steps to declare bankruptcy.

What are the seizable and non-seizable assets in a bankruptcy? See the answer in this article.

If your former spouse declares bankruptcy, it does not release you in any way from continuing to pay alimony, child support, or any arrears. As well, if you owe your former spouse alimony, or child support payments, you could have your wages garnished notwithstanding the bankruptcy. Alimony, child support and arrears are very well protected and these debts will live on after the bankruptcy.

The minimum amount of debt required by the Act before you can declare bankruptcy is $1,000. On the other hand, it stands to reason that with a debt of only $1,000, you should not consider bankruptcy as an immediate solution. Moreover, according to the Act, your must also be insolvent, in other words, you cannot honour your financial obligations as they generally become due.

If your former spouse declares bankruptcy, it does not release you in any way from continuing to pay alimony, child support, or any arrears. As well, if you owe your former spouse alimony, or child support payments, you could have your wages garnished notwithstanding the bankruptcy. Alimony, child support and arrears are very well protected and these debts will live on after the bankruptcy.

The cost of bankruptcy depends on 3 factors:

1. Is this your first bankruptcy?
If it is your first bankruptcy, you will need to make monthly payments for the duration of the bankruptcy. At Jean Fortin, this amount is $170 per month for 9 months, provided you do not have surplus income (see point 2).

If it is your second bankruptcy, the monthly payment will be $125 per month for 24 months in the absence of surplus income.

2. Do you have “surplus income”?
To find out if you are likely to have surplus income or not, click here.

During the first meeting, your advisor will make the necessary calculations to determine if you have surplus income and will explain the circumstances that could influence your case along the way.

Having surplus income will affect the duration of your bankruptcy. The existence of such income can extend your bankruptcy by an additional 12 months, which will impact the cost of your bankruptcy since you will have to pay over a longer period.

3. Do you own any assets?
If you want to keep your house, for example, but it is worth more than the balance of the mortgage, you will need to make an arrangement with your trustee to, in a way, “buy back” this equity from your creditors. This payment arrangement can be spread over months or even years. It is negotiated with your trustee, who must then submit it to the creditors for approval. The agreed-upon payment for the asset buyback will be added to the monthly payments you will have to make, increasing the cost of the bankruptcy.

Finally, among the consequences of a bankruptcy, a federal tax refund (but not provincial) and GST (up to a threshold established by Law) will be considered seizable assets, as well as any inheritance (except for exceptions) or lottery winnings you may receive before or during your bankruptcy.

From your first meeting, your advisor will analyze your financial situation and inform you of all the details specific to your case, as each case is unique.

It goes without saying that if, just prior to your declaring bankruptcy, you used your credit cards and made purchases knowing full well that the charges would not be paid back, such actions are not acceptable under the Act. In such cases, the Act provides that the creditors may oppose your discharge, or they may ask the court to have you pay additional amounts to the trustee or to have the debt declared non-dischargeable. This last recourse would mean that the debt would have to be paid back after your discharge from your bankruptcy, with interest. This type of behavior is not recommended.

It goes without saying that if, just prior to filing a proposal, you used your credit cards and made purchases knowing full well that the charges would not be paid back, such actions are not acceptable under the law. In such cases, the law provides that the creditors may oppose your discharge, or they may ask the court to have you pay additional amounts to the trustee or to have the debt declared non-dischargeable. This last recourse would mean that the debt would have to be paid back after your discharge from your bankruptcy, with interest. For obvious reasons, this type of behavior is not recommended.

Since June 18th 1998, student loans are no longer discharged if the bankruptcy or consumer proposal proceedings are initiated less than 7 years following the end of your studies. The end of your studies is considered by the ministry as the date at which the teaching establishment declares that you have stopped studying. If you choose to, or have no choice but, to file a bankruptcy or a Consumer Proposal within 7 after the end of your studies, you may, after 5 years, submit an application to the Court, asking to be discharged from the debt. Based on certain criteria, the Court may, at its sole discretion, discharge you. Should you satisfy the criteria and the court sees fit your application, a judgement may be rendered and your debt may be discharged.

The cost and duration of a bankruptcy are directly related to the existence of so-called ‘surplus income,’ which is income exceeding a standard set by the government. To calculate this, the average net income earned during the bankruptcy, the number of dependents, expenses for childcare, alimony (to be paid), and costs related to a medical condition and your employment will be taken into account.

Thus, if you do not have ”surplus income”, the bankruptcy will last 9 months for a 1^st bankruptcy and 24 months for a 2^nd one. The monthly contributions at Jean Fortin are $170 per month for 9 months for a 1^st bankruptcy or $125 per month for 24 months for a 2^nd bankruptcy.

If you have ”surplus income”, the duration will be extended by an additional 12 months, and the monthly contribution will be determined according to a mathematical formula established by law.

From the 1^st appointment with your advisor, they will explain in detail how to calculate the amounts to be paid and for how many months you will be in bankruptcy, based on the information available at that time.

When you declare bankruptcy, it’s a fresh start, and you’re entitled to include any tax debt up to the day you file for bankruptcy. There are 2 tax reports:

• One report covers from January 1^st to the day before your bankruptcy date.
• The second report covers from the date of your bankruptcy to December 31^st of the year of your bankruptcy.

Property that you may keep and that cannot be seized are provided for in articles 694 to 701 of the 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.

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).

If you declare bankruptcy, the law requires a merchant who is bankrupt to disclose this fact to those they do business with, but nothing prevents them from continuing to earn a living. However, you will no longer be able to be a director of an incorporated company until you are discharged from your bankruptcy.

That being said, the primary purpose of the Bankruptcy and Insolvency Act is to allow for your financial rehabilitation. As such, thousands of self-employed individuals have been able to continue their operations after bankruptcy.