Frequently Asked Questions
Can anyone file bankruptcy?
If you are considering bankruptcy, you must:
Owe at least $1,000.00
Be unable to pay your debts as they become due
Own insufficient property to pay all of your debts
Do I lose all my assets in a bankruptcy?
No. Most assets are protected from seizure pursuant to the Ontario Executions Act and The Bankruptcy and Insolvency Act. A bankrupt may keep:
All necessary clothing
Household furniture to a liquidation value of $13,150.00
Tools of trade valued up to $11,300.00
One vehicle valued up to $6,600.00
If there is under $10,000.00 equity in your principal residence
Locked-in pensions and rrsps
Life Insurance policies with certain designated beneficiaries
What happens to my debts?
Most lawsuits, garnishments, collections cease upon filing bankruptcy. Your creditors are advised to deal directly with your trustee. Upon discharge from bankruptcy, you are released from your debts.
The following debts are not eliminated with your discharge from bankruptcy:
Fines or penalties imposed by the court
Alimony, maintenance and child support payments
Debts obtained by fraudulent misrepresentation
Student loans less than seven years old from the date of bankruptcy
How long am I in bankruptcy?
Anyone who has not been bankrupt before will be discharged in 9 months if their income falls below the Superintendent’s Standards. The discharge will be automatic as long as the bankrupt complies with their duties. If the bankrupt does not comply with their duties, their discharge will be denied. A third bankruptcy is not eligible for an automatic discharge and the Trustee must apply to the Court to obtain the bankrupt’s discharge.
Are co-signers affected by my bankruptcy?
A co-signer remains responsible for the loan after you file bankruptcy and are responsible for the debt.
How does bankruptcy affect my credit rating?
A first time bankruptcy will remain on your credit rating for six years from discharge and fourteen years for a second bankruptcy. A consumer proposal will stay on your credit rating for three years after completion of the proposal.
Do I have to pay my income tax debt if I declare bankruptcy?
Income taxes owed before the date of bankruptcy are generally dischargeable, therefore you will not have to pay them.