Personal Bankruptcy

Help with Personal Bankruptcy in Canada

For individuals considering a personal bankruptcy in Canada, it is understandably a high stress process with many complexities to consider. Our team can help you navigate these complexities as well as consult with you on ensuring you have a clear understanding of the options

Personal Bankruptcy Lawyer Help

The first step in pursuing personal bankruptcy is to engage a firm such as ours to review your current situation and discuss the options that are available. Even if you qualify for personal bankruptcy (see below), there are options available that may be preferable and avoid some of the downsides of declaring bankruptcy. We can assist with assessing your personal finance situation and understanding the options that exist and ensure that you understand all of the implications of declaring a personal bankruptcy.

Engaging a professional is not only recommended but required by law in Canada to ensure that all of the necessary steps are carried out and that the bankruptcy process is correctly filed and administered. Our firm can assist with this process to ensure that once your bankruptcy is finalized, you can move on with peace of mind and focus on rebuilding your finances.

Main Laws and Rules

Personal bankruptcy in Canada is governed by The Bankruptcy and Insolvency Act (BIA) of legislation, which stipulates the requirements of whom can pursue bankruptcy and how a bankruptcy process is administered. Licensed trustees administer bankruptcy under the guidelines of the BIA to ensure the process is executed correctly. The objective of the BIA is to ensure that individuals who can no longer afford their basic cost of living are entitled to make a fresh start financially.

To qualify for personal bankruptcy you must meet the following general requirements:

  • You must be a resident of Canada,
  • You are unable to pay your bills when they are due, and
  • You owe more than $1,000

These broad criteria are fairly low, so even if an individual meets them, they may not want to pursue bankruptcy to address their debt issues.

Bankruptcy does provide some clear advantages, namely:
  • Legal protection from your creditors (including wage garnishments),
  • Eliminates unsecured debt you hold (i.e. credit cards and lines of credit),
  • You will likely be debt free within 9 to 21 months after bankruptcy, and
  • The cost of filing for bankruptcy is often minimal compared to the debts involved.
Disadvantages that come with filing for bankruptcy include:
  • Your credit score will be reduced to the lowest level for six years, preventing you from getting loans or credit cards for that time,
  • Some assets may need to be surrendered with your bankruptcy, i.e. a car or investments,
  • Detailed information must be submitted to your trustee, including all of your income and personal expense information

Types and Options of Personal Bankruptcy

While personal bankruptcy is an option for anyone who meets the requirement criteria, it may not be the best option for you. Our experts can consult with you and determine which additional options may exist for you to pursue.

Debt Consolidation Loan

For many individuals, a debt consolidation loan may be the best route to pursue in terms of managing your debt load. Financial institutions are often willing to consolidate the debt holdings of an individual into a single loan, effectively using that one loan to pay off multiple higher interest rate credit cards or debts. This can be beneficial for an individual as it can immediately reduce their monthly payments and the interest rate being charged on your debts.

A key benefit of a debt consolidation loan is that it will not negatively impact your credit score, as would happen with a personal bankruptcy or under the options below. This will not reduce your overall amount of debt, but it will make repaying the debt more manageable.

Consumer Proposal

A consumer proposal can be an attractive option, as it is a structured option to prevent bankruptcy, and also have a percentage of your overall debt written off. In principle, the reason lenders are willing to accept a consumer proposal is that they would prefer an individual not go bankrupt, where they effectively get nothing. Consumer proposals are the last step before a personal bankruptcy, in that they heavily impact your credit score, though not as poorly as under a personal bankruptcy. They often see a significant amount of debt written off.

We can assist you with pursuing this option and avoiding having to incur the full implications of a personal bankruptcy.

Debt Settlement

A debt settlement is a step short of a consumer proposal that sees some of your debt written off, and your credit score impacted, but neither as significantly as a consumer proposal. Typically, a moderate amount of debt will be written off by lenders to bring your debt down to a manageable level, as opposed to a consumer proposal where most of the debt may be written off. A structured debt settlement can be ideal for those that are struggling with their debt load but could manage and repay a moderately lower level of debt.

By engaging us to assist you, we can determine which option makes the most sense to you and also ensure that if you do pursue a personal bankruptcy, it is completed as painlessly and professionally as possible.