Before you file for bankruptcy in Canada, you are required to meet with a licensed bankruptcy trustee who will assess your financial situation. This assessment serves two purposes:
- It allows the trustee to fully review your situation and provide you with personalized advice regarding your options, and
- it gives you the opportunity to ask questions and to fully understand your options before you make a decision about whether or not bankruptcy is right for you.
That second point is very important: your meeting with your trustee is for your benefit, so take full advantage of it.
There are three important details that your trustee will want to understand. In order to gain the most out of your meeting is would be helpful for you to bring the following:
- A list of all of your debts (if you have recent statements, bring those to your meeting);
- Details about any assets you own, including a house, car and any investments (like RRSPs and RESPs);
- Your most recent pay stub.
In addition to these basic piece of information, you should also disclose to your trustee any other factors that will help them to advise you about your options. A list of your expenses each month is very helpful, so that your trustee can advise you as to whether or not a bankruptcy, consumer proposal or another solution is most affordable for you. It's extremely important that you do not enter into a legal process that you can't afford to keep up with every month to avoid making your situation worse, not better.
Finally, and perhaps most importantly, you should disclose to your trustee any changes that have happened in your life (or that you expect to happen). Some examples may include:
- A marriage, separation or divorce. A recent separation may make you liable for debts you haven’t considered. If you are considering a separation in the future, your trustee can explain who is responsible for debts in a separation.
- A medical condition. If you are off work for medical reasons, or if you expect to be off work in the future, explain your medical situation to your trustee. In some cases it may make sense to delay filing bankruptcy until you return to work. In other cases, a quick bankruptcy is a better option. With full information your trustee can help you make the decision.
- Employment changes. If you expect to start a new job, or get a raise in the future, discuss it with your trustee. The cost of a bankruptcy is based on your income, so if your income will be increasing, a consumer proposal may be a better option. On the other hand, if you expect to be laid off or have your income reduced, that will also impact the bankruptcy process, so you want to be prepared for either possibility.
As you can see, there are many factors that will impact your decision on whether or not you should file bankruptcy or a consumer proposal so it is important to disclose everything to your trustee, and to ask a lot of questions so that you fully understand the process. We also have a lot of information compiled into a list of debt definitions if you wanted to review any of the terms you might not fully understand.