Consultations available by video and phone with electronic signatures.

How The Bankruptcy Process Works: An Overview

How The Bankruptcy Process Works: An Overview

Bankruptcy is a legal process that provides tangible debt relief to anyone unable to meet their financial obligations. The Bankruptcy Insolvency Act (BIA) provides bankruptcy protection to anyone residing in Canada who has a minimum amount of unsecured debt (usually $1,000 and higher).



If you are a “honest but unfortunate debtor” (in the language of the federal Bankruptcy Insolvency Act, or BIA) that requires protection from your creditors, you can work with our firm to get relief from your money pressures. We are licensed by the Office of the Superintendent of Bankruptcy (OSB) to administer the bankruptcy process. Only a Licensed Insolvency Trustee can provide the legal protection you need.

As Licensed Insolvency Trustees, we are required by law to explain all of your debt relief options to you. If circumstances require it, you can file for Bankruptcy protection from your creditors. But be aware that this may be only one of several debt relief options available to you (see our Consumer Proposal page for another legislative option available to you). Whatever option you choose, you will be under the protective umbrella of the Federal Government’s Bankruptcy Act. No unsecured creditor will be able to seize (i.e. garnish) your wages or initiate any other collection action against you. In fact, they are not even allowed to communicate with you. Your Insolvency Trustee will handle all correspondence with your creditors from that point forwards, providing the relief you are legally entitled to.

To File Or Not To File For Bankruptcy?

How the bankruptcy process works: an overview

How do you know that it’s the right time to file for protection? Normally there are warning signs of financial hardship that become too hard to ignore. If you are behind on your minimum credit card payments each month, or borrowing from one type of credit to pay off a bit of another, those are major warning signs that you need some help to manage your debt.

You may be experiencing a situation where your creditors have already sent you demand letters requesting full payment of the debt, threatened to freeze your bank account or business account, or garnish your wages. If you’re at that point, then the warning signs have become too severe to ignore.

If any of these scenarios sounds like your life right now, you need to get some help with your debt burden.

The Bankruptcy Process – Step by Step

Let’s take a look at how the Bankruptcy process occurs, so you can understand the procedures and legislation and how they work together to help you achieve relief from crushing debt:

  1. Contact our office at (844) 507-7526 (or by clicking here to book a free, confidential consultation online at an office near you). We will make arrangements for you to attend a free, no-obligation consultation with one of our professionals to discuss your financial situation and your options. We understand the insolvency process – our firm has been assisting people with debt problems for more than 36 years. We have 50+ offices and more than 180 staff available to serve you.
  2. We will work with you to get the required forms completed properly. We will then file your bankruptcy with the Office of the Superintendent of Bankruptcy (this is now done electronically and goes directly to the government, so filing is quick and simple). The estate/court number that the government assigns to your filing will serve to crystallize the protection from your creditors. From this point onwards, your debts are frozen, interest ceases and garnishments will be lifted.
  3. The Insolvency Trustee will deal with your assets by ensuring that all personal exemptions you are entitled to are assigned. In most cases you will hold onto all of your assets, but the Trustee will review this information with you before you sign any paperwork.
  4. We will then be responsible for all further communication with your creditors. You will no longer need to deal with creditors or collection agencies.
  5. You attend a meeting of creditors, if one is called (a process that is exceedingly rare in most bankruptcy estates these days).
  6. Bankruptcy Payments and Income Reporting: during your bankruptcy, you may, in certain circumstances, be required to make payments to your trustee for distribution to your creditors, and provide monthly proof of your net household income, both part of your “duties” as a Bankrupt.
  7. You attend 2 mandatory Counselling Sessions. Each counseling session walks you through the budgeting, money management and financial rebuilding process. This is extremely helpful in teaching you how to financially reorganize your life. Each counselling is approximately 30-60 minutes in length.
  8. The Discharge from Bankruptcy Occurs: In most cases you will be automatically discharged nine months after filing for bankruptcy if it is your first bankruptcy, your discharge is not opposed by the OSB, the trustee or a creditor, you have attended your two counseling sessions on time, and you are not required to pay a portion of what is known as surplus income (based on your net household income – see below) into the bankruptcy estate.
  9. Surplus Income: If you are required to make payments from your surplus income, you will be eligible for an automatic discharge after contributing part of the surplus to your estate for 21 months.
  10. A letter of discharge is mailed out to you within approximately 30 days of your discharge – you need to mail or fax this discharge certificate to the two major credit bureaus and begin the process of rebuilding your credit. In many cases, a first-time bankrupt is automatically granted a discharge nine months after filing for bankruptcy unless a creditor, the trustee or the OSB objects.

Legally Entitled To Relief From Your Debts

As you can see, the Bankruptcy process is straightforward and tightly regulated. But the majority of people suffering under the yoke of debt can receive relief from their creditors by following the duties laid out for them by their Trustee.

Our goal, as your Insolvency Trustee, is to get you the protection you are legally-entitled to, and to deal with your creditors with respect to the money owed to them. Please call us toll-free at (844) 507-7526 today or click here to request a free consultation. We look forward to assisting you.