Do you have questions about bankruptcy and alternatives to bankruptcy?
For each question there is a written answer, and multi-media answers (to the right) denoted by these logos (for videos, click on the YouTube icon to make them larger):
audio video blog posting
1. If I go bankrupt, is my spouse responsible for my debts?
No. Your debts are your debts only, and your spouse's debts are his/her debts only. The fact that you are married does not have to do anything with it. The only time your spouse would be responsible for your debts is if he/she has co-signed for those debts. more>>
2. Can I file bankruptcy and still keep my house?
It is possible to keep your home when you claim bankruptcy in Ontario - as long as certain requirements are met. In order to keep your home, you must be able to pay all of your home's equity to a bankruptcy trustee, before the bankruptcy is completed. Therefore, if you have a lot of equity in your house, bankruptcy might not be the right option for you, and you might want to consider filing a consumer proposal instead.more>>
3. What happens to child support if I go bankrupt? Do I still have to pay it?
Yes. Court ordered child support or spousal support are not discharged in a bankruptcy, and so if you are paying a child support now, you would still have to pay it whether you are bankrupt or not.
4. Will I lose my car if I file a bankruptcy?
In Ontario, 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 (who then puts the money in your estate for distribution to your creditors).
5. What happens to student loan debt if I go bankrupt?
If a student with student loans files for bankruptcy in Canada, his/her student loans are not automatically discharged unless the student has been out of school for more than 7 years.more>>
6. What do I have to do if I go bankrupt? What are my duties?
There is a number of things the bankrupt person needs to do. Every month that you are bankrupt you have to send to your bankruptcy trustee a copy of your paystub, as well as your monthly budget. You also need to attend two credit counselling sessions during the bankruptcy process. In addition, you have to give your trustee the information needed for them to file your taxes, and if there is anything else your trustee needs, if they need your assistance with anything during the bankruptcy process, you are required to help them out with that as well.
7. How much will I have to pay in surplus income if I go bankrupt?
The government has set net monthly income thresholds for a person or a family to maintain a reasonable standard of living in Canada. Every dollar that a bankrupt family makes above the level set by the government is subject to a surplus income payment of 50% for the time while a person remains bankrupt. To calculate your surplus income payments, you can download our Surplus Income Worksheet (note: updated for year 2011)
Note: If your average surplus income each month is greater than $200 over the limit (meaning you are paying the trustee more than $100 per month in surplus income payments), your bankruptcy is automatically extended. A first bankruptcy is automatically extended for 12 months, and you are required to continue paying your surplus income payment for an additional 12 months. A second bankruptcy with surplus income is extended to a total of 36 months
8. Are there any ways to negotiate with Revenue Canada about paying back the taxes I owe?
As a general rule, Revenue Canada will not accept less than the full amount owing. Their logic is simple: if they allow you to pay less than the full amount owing, they may be forced to make the same deal with everyone else. However, there is a way to negotiate with Revenue Canada a repayment of the tax debt for less than the full amount owing, by filing a consumer proposal. more>>