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The Bankruptcy and Insolvency Act Relieves the Crushing Weight of Debt

The Bankruptcy and Insolvency Act

 the bankruptcy and insolvency act Canada


There has been a rise in personal insolvencies (bankruptcies and consumer proposals) in the last decade; the economic downturn we all felt in 2008 has made it more difficult for people to manage their finances and keep pace with their debt repayments.

There are a lot of reasons why people find themselves in a situation where they have too much debt and it is unmanageable:  through no fault of their own, people lose their jobs; or a sudden serious illness has an impact on their ongoing income or uses up your emergency savings; or there is a marital breakdown that has an impact on household expenses and income. In these situations a person’s ability to meet their ongoing financial obligations becomes difficult.

In these circumstances or if you simply cannot make any progress in reducing your debt load, you should consider filing for some of the solutions offered under the Bankruptcy and Insolvency Act.


bankruptcy and insolvency act - insolvency trends


The Bankruptcy and Insolvency act Canada was created to help the honest but unfortunate debtors, who find themselves in a financial difficulty, a way out of their situation. The Act provides a number of options to debtors for dealing with their situation that is both fair to the debtors and the creditors. It provides protection to debtors who cannot meet their financial commitments in return for surrendering their assets to a trustee for the benefit of the creditors.One this process is complete it provides the debtor with the opportunity for a fresh start.
There are two main options offered under the Act: Bankruptcy and a Consumer Proposal:

Consumer Proposals to Creditors


  • A consumer proposal is a formal agreement between you and your creditors in which you make an offer to settle your debts for an amount which is less than the total amount owing. This can result in as much as a 70% reduction in the amount you owe. More importantly it allows you to keep your assets, you car and your house.
  • A consumer proposal offers the following advantages:
  • As soon as accepted it is legitimately binding on ALL of your creditors. In other types of debt settlement you usually need to negotiate a settlement with each lender separately.
  • Due to the fact that the amount you have actually accepted to pay can be paid out over five years or sixty months, you have more flexibility in managing your monthly living costs.
  • There are no upfront costs as your initial consultation, where all of your alternatives are assessed, is free. When dealing with other solution providers you are frequently required to pay a consulting charge upfront even if you choose to take no action
  • Due to the fact that you will be dealing with a Proposal Administrator, controlled by the federal government, you can be guaranteed of the greatest requirements of professional habits
  • You will make no payments until your offer to your creditors is accepted then you typically make one regular monthly payment to your Administrator who pays out the funds to your creditors
  • You will not need to handle the ongoing harassing calls from your creditors as your Proposal Administrator will deal with all future transactions with them
  • Once you make the final repayment under your proposal you are formally released from the balance of your financial obligations owing.


how bankruptcy work

Bankruptcy is a legal process which provides a debtor who is unable to meet his or her financial commitments with a process for eliminating their debts in an orderly manner.
If you are in bankruptcy process, no unsecured-creditor can garnishee your wages or even more, to initiate any other form of collection action against you. A bankruptcy in Canada can only be filed through a Trustee in Bankruptcy, such as A.Farber & Partners Inc.

  • Income tax debt, payday loans and personal loans from friends & family can be included
  • Secured creditors remain outside the bankruptcy process & payments to them continue
  • Payments in a bankruptcy Canada are calculated based on net household monthly income & asset value
  • Bankruptcy is normally a faster process (9 – 36 months) than filing a consumer proposal
  • Some debts cannot be discharged (including child & spousal support, student loans (with exceptions), criminal and vehicular fines and debts arising from fraud)



Why Choose A. Farber & Partners?

  • 50+ offices across Ontario (there’s one near you!)
  • More than 35 years of insolvency experience
  • Convenient meeting times and hours (and all meetings are confidential)
  • FREE face-to-face consultation with a trained debt administrator or Trustee
  • A complete review of your financial situation
  • Reasonable solutions to your debt problems