While many people have some knowledge of what bankruptcy is and know that it is an option for those who are having financial struggles, not everyone knows the important details about personal bankruptcy in Ontario. Knowing and understanding this information is important when you are considering filing for bankruptcy. Personal bankruptcy is a legal process filed by a federally licensed insolvency trustee to give you protection from your creditors and ensure that they receive their share of any assets that you may have. It is a way for an “honest but unfortunate debtor” to begin the process of eliminating his or her debts. In order to file for personal bankruptcy, Ontario and federal laws state that you must speak with a Licensed Insolvency Trustee. This is a person who is licensed by the federal government to work with people who are having financial troubles, help them understand the options available to them and assist them in filing a consumer proposal or a personal bankruptcy. Only an Insolvency Trustee can file for bankruptcy for you. When you speak with a Licensed Insolvency trustee, he or she will review your financial situation. The trustee will then inform you of the options available to you that can help you reduce or eliminate your debt. In many cases, one of these options is to file for personal bankruptcy. Filing for personal bankruptcy is a legal process and the steps are outlined by the federal government, the Bankruptcy and Insolvency Act and the Office of the Superintendent of Bankruptcy. In general, the steps for filing personal bankruptcy are as follows.
Steps for Filing Personal Bankruptcy in Ontario
- After meeting with the trustee, if you do decide that bankruptcy is the right option for you, the trustee will help you complete the required forms that are submitted to the government to start the process. Once these forms can be submitted you are entitled to all benefits and subject to all the obligations under the Bankruptcy Act.
- The trustee will be responsible for all communication with your unsecured creditors from this point onward. Creditors and collection agencies will not be able to contact you and they will not be able to take any action to collect on their debts. Legal action against you and most wage garnishments stop at this point as well.
- The trustee will review your assets. In personal bankruptcy, Ontario law allows you to keep many of your assets. Other provinces allow for this as well, but the laws differ across the country. Your trustee will ensure that you receive all personal exemptions that you are entitled to. If you wish to keep assets that are not exempt, you will need to compensate the trustee for their value.
- A note that you filed for bankruptcy will be placed on your credit report. This note will remain for at least six years.
- In some cases, a meeting of creditors is called. However, this meeting is generally quite rare in Ontario.
- During the bankruptcy process, you will be responsible for reporting and proving your monthly income to the trustee.
- You may also need to make payments to the trustee that will be distributed to your creditors. Your trustee will let you know if and when such payments are required.
- As part of the process of personal bankruptcy, the law requires that you attend two financial counselling sessions. In these sessions, you will be provided with information on budgeting, money management, financial planning and other important information. These sessions will not only help you during the bankruptcy process, but they will also provide you with skills to help you avoid debt issues and money troubles in the future.
- Most personal bankruptcy cases in Ontario are automatically discharged after nine months, as long as it is your first bankruptcy and there are no objections from creditors, your trustee or the Office of the Superintendent of Bankruptcy. As long as you have been honest with the trustee, fulfilled your duties, made required payments and submitted reports as asked, discharge should not be an issue.
- Within 30 days of being discharged, you will receive a Certificate of Discharge by mail. You will then need to mail or fax a copy of this legal document to TransUnion and Equifax, the two credit bureaus in Canada.
- Upon discharge most of your debts under your bankruptcy are eliminated. These are some debts that do not go away, but the trustee will discuss that with you.
The process of filing for personal bankruptcy in Ontario with A. Farber & Partners is generally very straightforward and regulated. Your Insolvency Trustee will assist you along the way and answer any questions that you may have. Once you have completed the process listed above, the next step is to take action to improve your credit rating and rebuild your financial life.