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What Happens When you Claim Bankruptcy in Ontario?

Claiming Bankruptcy In OntarioWhile filing for bankruptcy is a well-known process that most have heard of, many people are unsure or even confused about how to claim bankruptcy in Ontario. The good news is that, because bankruptcy is a legal process, it is regulated and controlled by the federal government. This means that the process is set by law, which can eliminate some of the confusion surrounding it. Speaking with a trustee in bankruptcy can remove any remaining confusion.

Filing personal bankruptcy must be done with a licensed trustee in bankruptcy. This is a person who has received years of training and who has been registered and licensed with the federal government to review financial situations and administer bankruptcy and consumer proposal situations.

Most trustees offer a free consultation where they can sit down with you and review your situation. A trustee can then help you understand the different options that are available to you. One of these options may be filing for bankruptcy. However, this is usually not the only available option. Depending on your situation, there could be several possible alternatives.

 

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The Bankruptcy Process

Bankruptcy is a legal process that allows those “honest yet unfortunate debtors” who are unable to pay their debts as they become due with a legal process that gives them a fresh start and a chance to eliminate most (if not all) of their debts and rebuild their financial lives.

If you decide that bankruptcy is the right choice for you, your trustee will work with you to ensure that all required forms and completed and filed as needed. This can be done electronically.

Your trustee will review your assets and ensure that you receive all exemptions that you are entitled to. Different provinces allow for different exemptions and in different amounts. Your trustee will explain these exemptions to you and how they apply to your particular situation.

You will also be required to provide proof of income and expenses. Your trustee will then use this information to determine the cost of your bankruptcy. One of your duties in bankruptcy is to give your trustee monthly details and proof regarding your income and expenses. Depending on your income, you may have to make surplus income payments to your trustee. Your trustee will let you know if this is required.

Another duty of your bankruptcy is to attend two financial counselling sessions. These sessions will teach you important information on budgeting, money management and provide you with details on ways to rebuild your credit score following bankruptcy.

A meeting of your creditors may be called when you file for bankruptcy. However, these meetings are becoming increasingly rare these days unless there are complex issues.

It’s important to note that during the bankruptcy process, your trustee is responsible for all communication with your unsecured creditors. They are not able to contact you or take any steps to collect any debts. This means that legal action, calls from collection agencies and wage garnishment processes all stop.

Depending on your particular situation, you could be discharged from bankruptcy in nine months, if it is your first bankruptcy and if you are not required to make surplus income payments. Discharge happens automatically. Your trustee will sign your Certificate of Discharge and it will be mailed to you within 30 days. You should then mail or fax a copy of this certificate to the major credit bureaus. In Canada, the two major credit bureaus are Equifax and TransUnion.

A bankruptcy will remain noted on your credit report for six years after discharge, if it is your first bankruptcy.

Bankruptcy Alternatives

Filing for bankruptcy may not be your only option. While it may be the most well-known way to eliminate you debts, there are many alternatives available to people. Your trustee will provide you with details about the possible alternatives during your initial consultation. It will then be your choice to decide how you would like to proceed. Your trustee will never pressure you to choose a particular option.

When it comes to claiming bankruptcy in Ontario, it may seem overwhelming and confusing at first. But it doesn’t have to be that way. Your trustee will work with you, answer any questions you may have about how to claim bankruptcy in Ontario and assist you in completing the bankruptcy process. 

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