Filing for Bankruptcy in Ontario
Debt issues and financial troubles can put a serious negative strain on your life. Debt can cause you to lose sleep. Harassing calls from creditors can be overwhelming and stressful. Debt can even lead to health issues. That’s right, the stress caused by debt can be hazardous to your health. Financial stress has been linked to mental health problems such as anxiety, depression and a higher risk of suicide. Debt-related stress can also put you at greater risk of developing high blood pressure or suffering a stroke.
For these reasons and many more, it can be a huge relief when you realize that there are options out there that can help you reduce and eliminate your debt. One of these options is filing for bankruptcy.
Bankruptcy is a legal process that provides those who are unable to meet their financial commitments with a way to eliminate their debt. This process is governed by the Bankruptcy and Insolvency Act of Canada. If you are unable to pay your debts as they become due, bankruptcy may be an option for you.
Bankruptcy can only be filed by a licensed trustee in bankruptcy. This is a person who is registered and licensed by the Office of the Superintendent of Bankruptcy to administer bankruptcies and consumer proposals. A bankruptcy trustee can review your financial situation and provide you with details on the options available to you that can help you resolve your debt issues. Declaring bankruptcy may be one of these options.
What does it Cost to Claim Bankruptcy in Ontario?
The cost of your bankruptcy will depend on your particular financial situation. The cost is to a large degree regulated by the federal government you bankruptcy trustee will inform you of the cost of bankruptcy once he or she has reviewed your financial situation fully.
If you are required to make monthly payments, one aspect affecting this is surplus income. This will be determined by the trustee prior to filing. If this surplus income calculation changes then your payments may change to reflect this. You will be responsible for providing monthly income statements and proof of household income to your trustee..
What are Surplus Income Payments?
The Canadian government sets a monthly threshold that is required for a person to maintain a reasonable standard of living. If you make more than this amount each month, you may be required to make surplus income payments to your trustee. The more money you earn, the more you will have to pay in surplus income payments.
In order to find out the specific costs of bankruptcy for your particular financial situation, you will need to speak with a trustee in bankruptcy who has reviewed your finances.
It’s important to note that you are not responsible for paying an additional fee to your trustee while you are bankrupt. This is because the trustee’s costs are covered by a portion of the monthly bankruptcy contributions that you make. Also, there is also no charge for the initial consultation with the trustee.
Assets that are Exempt from Bankruptcy in Ontario
When you file for bankruptcy, you do not lose all of your assets. Ontario law allows you to keep certain assets that are deemed necessary to live your day-to-day life. The goal of bankruptcy is not to punish the person who has filed. Instead, the goal is to provide you with an opportunity to receive a fresh financial start.
In Ontario, the following assets are exempt:
- Up to $11,300 in household furnishings
- Up to $5,650 in personal items
- Up to $11,300 in tools of the trade
- Up to $5,650 in a personal vehicle
In most cases, you will also be able to keep you house, especially if the current value is close to the amount owing on the mortgage. However, if you have significant equity in your home, your creditors may have a right to this equity.
In addition, Canadian law allows you to keep RRSP contributions that were made more than 12 months prior to filing for bankruptcy. Contributions made in the last 12 months are not exempt.
If your pension plan is locked in until retirement and if your life insurance plan has a preferred beneficiary listed, these assets are usually exempt as well. Speak to your trustee for specific information that applies to your situation.
You may be able to keep additional assets as long as you compensate your trustee for their value.
As you can see, the process of bankruptcy in Ontario is a legal process that is governed by federal law. In order to understand how this law and the process affect you and your unique financial situation, you will want to speak with a licensed trustee in bankruptcy.