Don Allen - Bankruptcy Trustee & Receiver
Trustee & Receiver
705-733-1511 1-888-504-1511
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Bankruptcy FAQ

Who qualifies to file for personal bankruptcy?

  • If you are unable to pay your overdue bills; and
  • If you owe at least $1,000

How to enter bankruptcy protection?

The only way to file for bankruptcy is through a licensed Trustee in Bankruptcy. The first step when filing for bankruptcy is to contact us to discuss your debt options. If filing for bankruptcy is the right step for you, we  will guide you through the bankruptcy process.

What can I keep if I file for bankruptcy?

  • Household goods/furnishings with a resale value up to $11,300
  • Personal belongings (clothing, jewelry etc.) up to $5,650
  • Motor vehicles up to $5,650
  • Tools of the trade (equipment used to earn a living) up to $11,300
  • All private pension and RRSP amounts (excluding the amounts contributed in the last 12 months)
  • Farm equipment up to $28,300

Will my house be seized?

  • This a complicated question and the answer will vary depending on your individual circumstances.
  • Generally, if you don’t have significant equity in your house, then claiming bankruptcy should not affect your house. If you can afford to keep up all payments related to the house, you can keep it. See your House.

What is the cost of filing for personal bankruptcy?

  • We provide FREE initial consultation to understand and determine your best solution.
  • Our fees are set by government rates, with no additional costs added.
  • It is a standard amount set by the government based on your financial position.
  • Payment can be spread out over your bankruptcy period.

What is a Trustee in Bankruptcy?

  • A Trustee in Bankruptcy is the only person who can administer consumer proposals and bankruptcies
  •  They are licensed by the Superintendent of Bankruptcy and are officers of the court
  • Trustees have a duty to the debtor and all other parties to carry out the Bankruptcy and Insolvency Act law.

Do I continue to pay my creditors?

  • Your bankruptcy ends all payments from yourself to unsecured creditors.
  • We will help you determine what secured assets you might want/be able to keep and what ongoing payments are made to secured creditors.
  • What about my back taxes owing to Canada Revenue Agency (CRA)?
  • CRA will not generally accept less than the full amount owing. If they have not put a lien on your assets for unpaid taxes, their claim in bankruptcy is generally unsecured - the same as other unsecured creditors.
  • It is possible to negotiate with CRA repayment of your tax debt for less than the full amount owing, by filing a consumer proposal.
  • See Canada Revenue Agency

Can creditors garnishee my pay or accounts?

  • Once you have filed bankruptcy, we will arrange for your garnishment to stop

Do I keep my bank account?

  • You can keep your bank account, but you may want to open a new bank account on your Road to Recovery. We can discuss this further with you.

Do my spouse’s assets, income and debts get included in my bankruptcy?

  • Joint Assets – 50% of the assets that are in both your names will become part of your estate
  • Joint Debts – your spouse is now 100% responsible for the entire debt when you file your bankruptcy
  • Income and most assets and debt – unless they are joint, they are separate from your own

What are my duties as a bankrupt?

  • Keeping the Trustee informed of significant changes in your circumstance
  • Making agreed upon monthly contributions to the Trustee for the estate
  • Monthly reporting of all income and expenses to the Trustee
  • Attending two financial counselling sessions
  • Providing your tax information to the Trustee to complete your tax bankruptcy returns
  • We will explain these in more detail when we meet.

Will I lose my car if I file for bankruptcy?

  • A bankrupt is permitted to keep one motor vehicle worth up to $5,650. If your car has no liens and is worth more than $5,650, you may keep the car by paying the Trustee, for the benefit of your creditors, the difference. Thus, if your car is worth $6,650 with no liens, you can keep the car by paying $1,000 to your Trustee for distribution to your creditors.  If you lease the car, you can keep the car if your lease payments are current and you are able to keep up the payments. Again, if there is more than $5,650 of equity in the car, you will need to pay the Trustee that excess toward your estate.

What happens to child support when I go bankrupt?

  • Court ordered child support or spousal support are not discharged in a bankruptcy
  • If you are paying child support, you will have to continue to pay it

What happens to my student loan?

  • If you have been out of school for 7 years, these are eliminated in a bankruptcy. If you have been out of school between 5-7 years, you can apply to the student loans office for relief on account of hardship. If you have been out of school for less than 5 years, the loans remain.
  • If you have other significant debts, bankruptcy may still be a good option. Filing bankruptcy can help clear other debts and make repaying your student loan more manageable.
  • An alternative is to file a consumer proposal  to pay only a portion of your non-student debts to make repaying your student loan more manageable.

When is a bankrupt discharged?

  • First time bankrupts with no surplus income  - automatic discharge in 9 months
  • First time bankrupts with surplus income  - automatic discharge in 21 months
  • Second time bankrupts with no surplus income  - automatic discharge in 24 months
  • Second time bankrupts with surplus income  - automatic discharge in 36 months
  • These time periods apply unless there is opposition from a creditor or Trustee, which is rare

How does bankruptcy affect my job?

  • Generally, bankruptcy should not affect it at all and your employer will not be informed of it.
  • If your tour wages are being garnished, we will communicate with your employer to stop this.

How will bankruptcy affect my credit rating?

  • When you file bankruptcy, the Superintendent of Bankruptcy will notify credit bureaus and it appears on your report for 7 years for first time- 14 years for second time bankrupt.

How can I improve my credit rating?

After you are discharged:

  • Get a secured credit card – This is basically a prepaid credit card where you deposit say $500 with a bank as a security deposit. Use the card up to this limit and make full payment each due date. If you don’t, your deposit is applied against what is owing.
  • Borrow secured money – If you have an asset you can borrow against and make all payments on time, this will improve your credit rating. If you have someone who will sign or guaranty your debt and you repay on time, this will improve your credit rating. If you don’t, the co-signer will be required to pay.
  • Borrow for an RRSP – Banks look favourably on you if you have an RRSP. Get an RRSP loan and use the tax refund to pay down the RRSP loan will improve your credit rating.
  • Borrow money – Even if you don’t need to, obtain a small credit line and use it to pay bills only. Then immediately pay off the credit line as you use it. Continue repeating this process and over time, it will significantly improve your credit rating.

What happened to my personal tax returns?

  • You provide us with your information to prepare a pre and post-bankruptcy tax return for the year of bankruptcy.  See Tax Preparation Information.

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