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Month: December 2013

What Does it Cost to File for Bankruptcy in Ontario?

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Filing for bankruptcy is a big decision. It has both positive and negative financial consequences that impact you and your family. Before you make such a big decision it’s important to weigh your options and understand the ramifications of filing for bankruptcy in Ontario, both in the short and long term.

A word of caution: Filing for bankruptcy can be a complicated process that can’t be fully understood by skimming through a few articles. We strongly suggest that you take your time and do your research to determine which debt management options are best for your unique situation. Ontario bankruptcy trustees are the best place to go when seeking detailed information about bankruptcy. At Hoyes Michalos we offer you a free initial consultation, which is great because it means that you can test the waters prior to making any commitments.

Bankruptcy costs

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There is a financial cost to bankruptcy, and it’s different for every person who goes bankrupt. That’s because the government has decided that the more you earn and the more you own, the more you have to pay to your creditors. First let’s look at the cost based on your income. The government knows you need income to live on, so they allow you to keep a portion of your income for living expenses. The amount you get to keep is based on your family size, the bigger your family the more you get to keep. Earn income over this threshold and you have to pay half of this surplus income to your creditors. The second cost of bankruptcy is based on the assets you own. In a bankruptcy you don’t lose everything, just like with your income, the government created rules of what you can keep and what your creditors can have. The rules differ by province, but in Ontario you can keep most personal possessions and household furnishings, tools you need for work, 1 motor vehicle depending on its value, most pension and RRSP savings except recent contributions to an RRSP. There are dollar limits on the value of assets you keep, but in most cases, people find the limits high enough to protect their basic belongings. Your creditors are entitled to any equity in your home, investments and other assets, RRSP contributions you have made in the last year, tax refunds you might be entitled to up to the year you go bankrupt. If you have a lot of assets or a high income you should talk to your trustee about a consumer proposal. You can negotiate a plan to settle your debts and keep your assets. If you don’t have any assets and don’t earn any income, you might not even have to file bankruptcy. But if you do, you will need to make payments to cover the cost of administering your bankruptcy. Your situation is unique, to get an estimate of what your bankruptcy might cost, please call or email us to arrange a no charge initial consultation with a Hoyes Michalos professional.

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The cost of bankruptcy includes fees that need to be paid when declaring bankruptcy such as government filing fees, court fees, and other administrative fees. The average bankruptcy will require a minimum payment of around $250 per month to cover these costs.

You will also be required to pay something called surplus income. Under the rules of the Bankruptcy & Insolvency Act, you are required to remit to your trustee 50% of your net income over a set minimum threshold. This calculation can become quite complicated and can increase the cost of your bankruptcy so you should always take to your trustee about the possibility of having to make surplus payments.

Another important point to mention is that if you file for bankruptcy you’ll be losing any assets that are non-exempt. You either surrender these assets to the trustee or can make additional payments to pay the trustee their fair market value if you want to keep those assets.

Not all assets are forfeit. Exempt assets in Ontario are covered in the Ontario Execution Act and the Bankruptcy & Insolvency Act. Some of the exemptions (updated for 2015 limits) include:

unlimited clothing;
$7,117 of vehicles;
$14,180 of furnishings & appliances;
$14,405 of equipment that you use for your career (tools of the trade)
RRSPs and similar pension funds except contributions made within the last year.

Particular kinds of life insurance are also exempt.

What happens to my tax refunds?

Another complicated area in bankruptcy is tax refunds and HST credits. If you file for bankruptcy you won’t be eligible for some tax refunds or HST credits. You’ll also lose any windfalls during your bankruptcy. Windfalls include money that you’ve inherited from a family member or the lottery. The moment you’re aware of these, you must tell your trustee immediately.

Are there any debts I still have to pay?

Since secured loans, child support and alimony and some other debts cannot be included in a bankruptcy, you will still need to make your regular payments on these obligations even if you declare bankruptcy.

How can I lower my monthly payments if I have surplus income or assets?

If your income is high enough to trigger surplus income, or you have assets like equity in your home or investments that you would like to keep, talk to your trustee about a consumer proposal. A consumer proposal is an offer to your creditors as an alternative to bankruptcy. The amount you offer will still be based on what bankruptcy might cost as this is the minimum your creditors will expect. However, with a consumer proposal, you can spread this cost over five years, making the monthly payment much more affordable.

In order to understand how much you’ll repay once you’re bankrupt, your trustee will talk to you about your income, the size of your family and your assets as well as other considerations.

If you would like a personalized assessment of how much bankruptcy might cost for you, call us at 1-866-747-0660 for a free consultation with an Ontario bankruptcy trustee.

7 Facts About Your Credit Rating (What’s in your Credit Score?)

Posted in Credit Repair

By Hoyes Michalos

Reading time: 5 minutes

Your credit rating is a score assigned to you that tells a potential lender how much of a credit risk you are. Understanding a little about how your credit rating works can help if the process of rebuilding your credit. Here are 7 useful facts about your credit rating:

Your credit report contains information about you and your credit transactions including basic personal information and your payment history as well as public information including whether or not you filed a bankruptcy, proposal or debt management plan. Your report includes information about when you opened your accounts, how much you owe, whether you make payments on time, if you miss payments, if you have accounts that have been sent to collection and whether you go over your credit limit. Credit history is provided by lenders to the credit bureau and is updated every 30 days. Information about your bankruptcy or proposal is provided by the Office of the Superintendent of Bankruptcy when you file and after your discharge or completion.
You don’t have to pay for a copy of your credit report. By law, you can obtain your own credit report for free from Equifax or Trans Union. While you can get a copy of your credit report for free, you must pay to get our credit score. Here is a bonus tip: you are entitled to receive one free copy of your credit report (not including your credit score) each year. If you want to review your credit report more frequently, you could request your Equifax credit report now, and then your TransUnion report in six months, and continue alternating every six months with each credit bureau.
Your report may contain errors. These errors can be about your personal information such as your mailing address or social insurance number but can also include errors about your credit account and payments details such as a debt that you’ve already repaid. It is very important to correct any errors on your report by providing supporting documents to the credit bureau through their dispute resolution process. The Equifax process can be found here and the TransUnion page can be found here.
There are 6 basic factors that affect your credit rating:
- Payment history shows whether you pay your bills on time.
- Credit utilization is an indication of how much of your credit you use. Bumping up against your limit is bad for your credit score.
- Length of credit is how long you have had each account. The more (positive) experience you have with credit, the better your score.
- Stability: The longer you have lived at your current address, or have worked at your current job, the better your credit score.
- Type of credit will also influence your credit score. A healthy mix of accounts between credit cards, lines of credit and term loans will improve your score.
- Credit inquiries will also impact your score. The more ‘hard’ hits you have by lenders, landlords or employers the lower your score.
Your credit rating might be different than the one your lender sees. A lender may order a credit report that is designed to meet their needs. They may put more weight on certain factors depending on the reason they are assessing your credit worthiness. In addition to there being two prominent credit reporting agencies in Canada, your lender has access to scores you do not such as your bankruptcy score.
Limit the number of credit applications you make. If too many lenders inquire about your credit in a short period of time, this can have a negative impact on your credit score. Lenders, landlords or anyone assessing your credit can only request your credit report if you give them permission.
If you have more debt than you should, make a plan to pay it down. If you can’t do that on your own, talk to a debt expert like a Licensed Insolvency Trustee to review your options.

Other factors that can have a negative impact on your credit score:

Moving recently or frequently. The longer you live at a resident the better for your credit. If you are moving temporarily (for school or work), consider using a family member’s address as a permanent address.
Changing jobs or employers often. Your credit rating is based on the perception that you have the ability to repay a loan. A long employment history has a higher correlation with credit repayment and thus will increase your credit score. Frequent job changes will lower your credit score.

What Credit Score Do You Need?

Both TransUnion and Equifax use a credit scoring system which gives you a number between 300 and 900. How both report these numbers differs slightly, however the higher your score the more likely you will be to qualify for credit at a good rate.

Equifax	TransUnion
300-560 = Poor	300-599 = Very Poor
560-659 = Fair	600-699 = Poor
660-724 = Good	700-749 = Fair
729-759 = Very Good	750-800 = Good
760-900 = Excellent	801-900 = Very Good

It is not, however, necessary to chase the highest score. Perhaps all you want is an unsecured credit card for daily use (which you will now pay off every month). If this is the case, you will need to achieve a score above 560 (600 for TransUnion). Achieving this objective can happen very quickly, without needing to work hard to build a better credit score.

If, however, you plan to purchase a car or apply for a mortgage then you will need to build a better credit score. This will take time but can be achieved through effective strategies to rebuild your credit.

Our infographic below summarizes some information about how your credit rating is determined and provides further tips on getting a loan after bankruptcy.

Top 5 Debts that Bankruptcy Can’t Discharge

Posted in Debts Discharged

By Hoyes Michalos

Reading time: 3 minutes

Bankruptcy is a legal process that acts to clear debts that are owed to unsecured creditors. However, filing for bankruptcy doesn’t necessarily mean that you will emerge debt free after the process is completed. There are some debts which you cannot include in a bankruptcy. Thus, even after your bankruptcy is complete and you receive your discharge from bankruptcy, certain debts will still require repayment. Here are the 5 most common of these debts:

Child support is not a debt that can be included in a bankruptcy. If you have been ordered by a court to pay child support, bankruptcy will not affect this arrangement. You will be required to continue to make payments.
Alimony is also excluded. Similar to child support, alimony or spousal support is not discharged in bankruptcy. Even after completion of your bankruptcy, you are not released from spousal support duties. Also, both child support and alimony payments are not subject to stays or suspension, so whatever payment arrangements you have will remain the same, even during your bankruptcy.
Debt related to fraud or misrepresentation is not dischargeable by bankruptcy. Any debts accumulated as a result of fraud will not be discharged through bankruptcy. For example, if prior to your bankruptcy you begin racking up expensive charges on your credit cards (with no intention of paying this debt back), your creditors can apply to have this debt excluded from your bankruptcy discharge. Creditors are within their rights to object to your discharge due to unusual or excessive transactions prior to bankruptcy, which could affect the length of your bankruptcy or require you to make additional payments.
Court-imposed fines and parking tickets are not discharged by bankruptcy. If you have been fined in a court of law, you will have to pay the fine regardless of your bankruptcy.
Student loans less than 7 years old are not automatically discharged in bankruptcy. To be included, your student loans must be over 7 years old. If you have a student loan that is more recent than this, the debt will still be yours to repay even after completion of the bankruptcy process. There are alternative solutions that are better-suited to handling the elimination of student debts.

While these debts cannot be included in a bankruptcy discharge, the other debts that are eliminated via bankruptcy can help make it easier to service them. There also are a number ways to avoid bankruptcy including a consumer proposal that may prove to be the better solution given your particular situation.

Need help with debt? Call us at 1-866-747-0660 for a free consultation where we explain all your debt relief options.

What to Do When You Have Too Much Debt to Handle

Posted in Dealing with Debt

By Hoyes Michalos

Reading time: 7 minutes

For most people it would be impossible to buy a house without a mortgage, to purchase a new car without financing, or even to attend college or university without student loans. Debt allows us to finance things we cannot buy today, but what happens when your debt is out of control?

How do you know if you have too much debt to handle? What is an acceptable debt-to-income ratio?

The average person we meet owes more than $52,000 in unsecured debt. That’s debt that doesn’t include their mortgage or a secured car loan or lease. That’s a lot of credit card debt, tax debt or student loans to repay for the average person. Yet we help people with debts as low as $10,000 and debts far exceeding the average. How much debt is too much depends on your specific situation.

And if you are struggling, what do you do when you can’t make your monthly debt payments anymore?

What’s your debt service ratio?

When you borrow money, banks and other lenders decide on the amount of debt you can handle based on what percentage of your income your debt repayments are taking up.

If you add up all your expenses – including debt repayments, mortgage installments, heating bills, taxes etc. – the total monthly amount shouldn’t be more than 40% of your monthly income. This is known as Total Debt Servicing Ratio, or TDSR. Mortgage lenders look at the percentage of income you are spending on housing costs including your mortgage payment, heat, taxes and condo fees. Here a ratio of 32% is considered risky by most mortgage brokers.

But is this level of risk acceptable to you? While 40% may be a good rule of thumb for your lender, the level of debt you should consider healthy will depend on your unique circumstances. You have to be able to comfortably afford your monthly payments (both principal and interest).

If you are only including minimum payments on your debts, a debt service ratio of as low as 20% can mean you have too much debt and may need to file a bankruptcy or proposal if you ever want those debts to go away.

Warning signs you have too much debt

If you’re being pressured by collection calls from creditors for payment, your wages are being garnisheed, utility companies are threatening cut off services or creditors are threatening to repossess your vehicle or furniture, those are clear indications that you have a debt problem that needs to be resolved.

But what got you into this situation in the first place? What are some not so obvious warning signs that you might be carrying more debt than you can handle?

You use credit for necessities because you are living paycheque to paycheque.
You’re rolling over your credit into new credit.
You only make the minimum payments on your debt.
Your using expensive credit like cash advances and payday loans.
You regularly use overdraft protection on your bank account.

If your personal financial situation resembles much of the above, then it’s time to reach out for help.

Understanding your options to get out of debt

When you can’t pay your bills, there are options that can help including credit counselling, a consumer proposal and, only when necessary, filing personal bankruptcy.

Each option will provide you with a different timeline to get out of debt and will have a different monthly cost.

Debt Management Plan

Credit counsellors offer a program called a debt management plan. To determine your monthly payment, take the amount of debts you owe and divide that by 60. This would be your monthly cost under a debt management plan. If, for example, you need help with $20,000 in debts, you could make a repayment arrangement over 5 years and your monthly payment would be $333 a month.

If you can afford $333 a month for 5 years to pay off $20,000 in debts, then you can explore this option with a reputable credit counselling agency.

Consumer Proposal

For many people struggling with a lot of debt, a debt management plan is still too costly.

A consumer proposal is the next viable alternative to bankruptcy.

With a proposal, you can settle your debts for less than the full amount owing. Your exact settlement will depend on your income and any assets you own; however, proposals often result in settlement in the range of 30 cents on the dollar or less. In our example, your monthly payment would be reduced to just $117 a month if you choose a 5-year program.

If you can afford more, you can lower your proposal term. You can also start out with a 5-year term and pay off your proposal early or make extra payments at any time. Proposals are interest-free so there is no penalty for an early payout.

Personal Bankruptcy

If you cannot afford a proposal to your creditors, then bankruptcy may be a way to eliminate debts that you cannot repay on your own.

The cost of bankruptcy and how long your bankruptcy lasts depend on your income. If this is your first bankruptcy, and your income is below a certain government limit, you can be debt free in as little as 9 months.

Debts don’t go away on their own

Some people will tell you that your debts are gone when you no longer see them on your credit report. Bad debts are purged from your credit report after six years. However, your debts won’t just go away if you ignore them. No matter how long you wait, they will still be there and so will the stress.

Debts can be sold. Creditors and collection agents will continue to call. They can try to sue you although you might be able to defend against a lawsuit by claiming the debt is too old under the Ontario statute of limitations for debts. However, I’ll repeat, the debt itself doesn’t go away.

If you try to buy a car or house, unpaid debts could make it difficult to get approved for the purchase, forcing you to shop around with different lenders which could lead to high interest rates. Putting off dealing with your debt takes away your control and puts your financial future in the hands of a lender.

One of the most common statements people make to me after they have started their plan to become debt free is “I wish I had done this sooner.”

When I ask them, “What was stopping you from contacting us to get out of debt earlier?”, the most common responses I receive are:

I was embarrassed to call
I didn’t know what help was available or who I could talk to
I believed (or hoped) that one day it would get better
The banks and credit cards kept increasing my limits or giving me new loans, so I was ‘managing’
Something just kept coming up or life was too busy, and I kept postponing the call
I thought being in debt with overextended credit was normal
I didn’t know how bad my situation was until it became critical

That last reason is telling. In other words, they didn’t know how much debt much debt was too much debt for their situation.

Asking for help is a good first step

People often feel like they must try anything and everything before they speak to a bankruptcy trustee. They spend years fighting the good fight, paying one credit card debt with a different card or living on payday loans. They take out consolidation loans from either their bank or secondary lenders and end up paying extremely high interest rates just trying to stay afloat.

It’s time to stop the cycle of debt and get a fresh start.

That’s what speaking to a trustee can offer you, a fresh start.

99% of Hoyes Michalos Consumer Proposals Accepted by Creditors

Posted in Consumer Proposals

By J. Douglas Hoyes, CA, LIT

Reading time: 3 minutes

If you file a consumer proposal with Hoyes Michalos, you have a 99% chance that your proposal will be accepted by your creditors. You read that correctly: our consumer proposal acceptance rate is 99%!

Our proposals group maintains detailed statistics on all proposals filed at Hoyes Michalos, and I am very pleased to report that if you file a proposal with us, it is very likely to be accepted by your creditors. Here are the detailed statistics for the last three years (up to the end of October, 2013):

	2011	2012	2013
MOC Requested	11%	14%	17%
Passed as Filed	92%	91%	88%
Amended Proposals	7%	8%	11%
Success Rate Including Amendments	99%	99%	99%

Here are the details:

These results include all of the many thousands of proposals we have filed during this period;
“MOC Requested” are proposals where the creditors requested a Meeting of Creditors, which is required if 25% of the creditors request a meeting;
“Passed as Filed” are proposals where no changes were required; the proposal originally presented to the creditors was accepted;
“Amended Proposals” are proposals where the creditors requested amended terms (generally more money), and after the debtor agreed to the changes the proposal was accepted.

What does this mean to you?

If you select Hoyes Michalos to be your consumer proposal administrator, you have a 99% chance that we will be able to negotiate a settlement for your debts that will be acceptable to both you and your creditors. That’s great peace of mind.

As you can see from the numbers, the number of proposals “passed as filed” has declined slightly over the last three years (from 92% to 88%), indicating that creditors have become somewhat more “picky” in the amounts they are willing to accept. That’s why it is critically important to use an experienced firm like Hoyes Michalos to act as the administrator of your consumer proposal, so that you can be confident that you are offering a proposal that is “just right”. If you offer too much you may not be able to afford the payments; too little and the creditors may not accept it. By offering the correct amount it’s a “win-win” situation, with all parties satisfied with the outcome.

How does Hoyes Michalos compare to others?

I have no idea what the success rate is for other trustees, although mathematically it can’t be much higher than 99%.

I do know that many people choose to use a debt settlement firm instead of a firm like Hoyes Michalos to deal with their debts. What is the success rate for debt settlement firms?

10%

According to the Canadian Bankers Association, “only about 10 percent of proposals that banks receive from debt settlement companies are actually accepted.”

If you have more debt than you can handle, you have a choice. You can go to a debt settlement firm and have a 10% chance of success, or you can call us at 1-866-747-0660 today and have a 99% chance of success on your proposal.

99% or 10%. It’s your choice.

Realization and Distribution of Assets in a Bankruptcy

Posted in Assets & Property

By J. Douglas Hoyes, CA, LIT

Reading time: 3 minutes

When you file for bankruptcy, your trustee is required to “realize” on your assets and distribute the proceeds to your creditors.

In simple terms, you (the person who goes bankrupt) and the creditors (the companies you owe money to) both “win” and “lose” in a bankruptcy.

You win because your debts are eliminated, but you lose some of your assets.
The creditors lose because in most bankruptcies they only recover a very small amount of the money they are owed. To be fair, they do receive any non-exempt assets you may have.

For example, when you declare bankruptcy Canada Revenue Agency is automatically notified, and your tax refund for the year of the bankruptcy (and any prior years that you have not yet received) are forwarded to the trustee. In technical terms, the realization on your tax refund is the refund that is paid to the trustee.

Other assets in this realization process would include your surplus income, equity in a house or car, or any non-exempt investments.

NOTE: In most bankruptcy filings in Ontario, other than a tax refund, there are no assets subject to realization by the trustee. Bankruptcy exemptions allow you to keep your basic household furnishings and personal items, and you can keep one motor vehicle up to a limit determined by the Ontario government, and you can keep your RRSP (except for contributions in the last year). So, in most bankruptcies, you don’t have any assets subject to realization.

At the end of the bankruptcy the trustee does an accounting of all of the money they have realized during the bankruptcy, and that money is then distributed. Here’s how the distribution of assets and other funds works in a bankruptcy:

First, the trustee pays a filing fee to the government, and the trustee’s administrative disbursements (such as the mailing to your creditors) are paid. The trustee is then paid their fee, based on a formula set by the government. (All trustees are paid based on the same formula).
Second, if there are funds available, the government is paid a “levy” of up to $200, which is paid to the Office of the Superintendent of Bankruptcy to fund their operations, which include regulating all trustees to ensure the trustee is following all of the rules.
Third, if there are funds available, they are distributed to the creditors. This distribution of funds from the assets of the bankruptcy is called a “dividend”, and each creditor receives their “pro-rata” share, meaning that the larger creditors receive more dollars than the smaller creditors.

Finally, in the highly unusual event where all of the creditors are paid in full, plus interest at a prescribed rate, any funds remaining would be distributed to the bankrupt.

The realization and distribution of assets in a bankruptcy is governed by federal law.

If you have questions about your situation and what assets you will keep or lose call us at 1-866-747-0660 to book a free consultation.

The Bankruptcy Process in Canada Explained in 5 Easy Steps

Posted in Bankruptcy Process

By Hoyes Michalos

Reading time: 6 minutes

A chart showing the five steps of how bankruptcy works in Canada

The process of personal bankruptcy in Canada can be broken down into five basic steps:

Consultation with a Licensed Insolvency Trustee
Preparation of documentation
Filing and achievement of the stay of proceedings
Completion of bankrupt’s duties
Discharge and elimination of debts

Below we detail how Canadian bankruptcies work and what is involved in declaring a bankruptcy procedure in Canada. You may also be interested in our related article 4 stages of a consumer proposal.

How does the bankruptcy process work?

Personal bankruptcy is a legal process which allows you to be discharged from most of your debts.

Once filed, non-exempt property of the debtor is given to a Licensed Insolvency Trustee who then sells it and distributes the money among the debtor’s creditors in settlement of the debt.

Step 1: Contact a Licensed Insolvency Trustee

Bankruptcy in Canada can be declared by any individual who owes at least $1,000 and is insolvent. However, bankruptcy is not the right solution for everyone.

The first step in the bankruptcy process is to contact a Licensed Insolvency Trustee for a free consultation.

Your trustee’s role in the consultation process is to assess your financial situation to see if you meet the requirements for bankruptcy and if bankruptcy makes sense. The trustee will ask questions about your debts, what you own and your household budget and will provide you advice on all your debt relief options including alternatives to bankruptcy.

You should know that before declaring bankruptcy, there are some common mistakes to avoid before filing like taking out a new loan, for example.

Step 2: Complete Bankruptcy Forms and Documentation

If you decide to declare bankruptcy, the next step is to pull together all the necessary paperwork and complete the required government forms to file your bankruptcy petition. This typically begins with a bankruptcy application form from your trustee (click here for our Fresh Start Bankruptcy Application).

The trustee will then draft the legal documents for the court including:

A Statement of Affairs (Form 79) which lists your assets, debts, income and expenses. It also includes your address, marital status, household size and disposition of any assets before bankruptcy.
An Assignment of Assets (Form 21) which is the document that assigns all of your eligible assets to the benefit of your creditors.

It is important that you complete these bankruptcy forms accurately and honestly. These documents are signed by you to ensure that they are correct.

Step 3: Your Documents Are Filed and Your Creditors Are Notified

After you sign your documents they are filed electronically by your trustee with the federal government. You are considered bankrupt when these forms are filed with the court and a file number (or estate number) is issued.

Filing with the Official Receiver creates the automatic stay of proceeding that prohibits creditors from pursuing you to collect on your debts.

Your trustee will then begin the process to notify your creditors. Notices may be sent electronically, by fax or by mail. That means your creditors find out fairly quickly that you have filed bankruptcy and collection calls and other actions should stop. If they do not, speak to your trustee about how to proceed.

If your wages have been garnished, or a garnishment order has been issued, your trustee will also immediately notify your employer to stop the garnishment.

Bankruptcy deals with unsecured creditors like credit card debt, payday loans, tax debt to Canada Revenue Agency and certain student loan debt. Your trustee will provide you with information on what debts are included and excluded and how to continue to meet any obligations to your secured creditors like a car loan or mortgage.

Step 4: Complete your Bankruptcy Duties

The objective of bankruptcy is to eliminate your debts. To obtain your discharge, you must complete certain bankruptcy duties including:

surrender certain assets and your credit cards;
attend two credit counselling sessions;
send proof of income and expenses to the trustee monthly;
make payments including if required surplus income payments;
provide information needed to file necessary tax returns.

Your trustee will file two tax returns during your bankruptcy – a pre-bankruptcy return covering the period up to the date of bankruptcy and a post-bankruptcy tax return to the period to December 31 while you are bankrupt. While you lose tax refunds as part of the bankruptcy process, you keep all HST / GST cheques and child tax benefits.

Very few bankruptcies in Canada require a creditors’ meeting, less than 1 in 1000. If creditors request a meeting, your trustee will prepare a report for the court and you will be required to attend.

Step 5: Obtain Discharge from Bankruptcy

Most personal bankruptcies in Canada end in an automatic discharge. How long you will be bankrupt depends on the completion of your duties, how much you make, and if you have filed bankruptcy before. For a first time bankrupt, with no surplus income, a bankruptcy can be finished in as early as 9 months.

Your discharge is the most important step, since your bankruptcy discharge is what eliminates your unsecured debts. You have a fresh start.

After your debts are discharged, you can continue the process of rebuilding your credit and finances. A note of your bankruptcy will be removed from your credit report six years after your date of discharge. Some people are able to obtain a credit card during bankruptcy although we do not recommend taking on new credit while bankrupt.

Consult a Licensed Insolvency Trustee Near You

As you can see the bankruptcy process in Canada is a safe and regulated procedure. It is not as bad as you may think and can be a very good option for individuals if you can’t pay your debts.

Under Canadian bankruptcy law only a federally licensed trustee can file bankruptcy for you.

If you are considering bankruptcy in Ontario, contact Hoyes Michalos for a free, no-obligation consultation where we’ll answer any questions you have.

Get a free consultation today

Hoyes Michalos & Associates provides personal bankruptcy services in the following locations

In Canada, you can find a reputable trustee at https://bankruptcy-canada.com/trustee/

Month: December 2013

Bankruptcy costs

What Credit Score Do You Need?

What’s your debt service ratio?

Warning signs you have too much debt

Understanding your options to get out of debt

Debts don’t go away on their own

Asking for help is a good first step

How does the bankruptcy process work?

Step 1: Contact a Licensed Insolvency Trustee

Step 2: Complete Bankruptcy Forms and Documentation

Step 3: Your Documents Are Filed and Your Creditors Are Notified

Step 4: Complete your Bankruptcy Duties

Step 5: Obtain Discharge from Bankruptcy

Consult a Licensed Insolvency Trustee Near You

Get A Personalized Debt Free Plan Today