As a licensed bankruptcy trustee in Canada and someone who has gone through the immigration and Citizenship process I realized that sometimes the paths of bankruptcy law and immigration law cross.
Can I Sponsor Someone While Bankrupt?
The biggest effect that a current or past debt problem will have on immigration is that you cannot sponsor someone to immigrate to Canada while you are an undischarged bankrupt. The good news is that once you receive your discharge you are eligible to make a sponsorship application.
If you are in debt and looking to sponsor a family member discuss this openly with your bankruptcy trustee. They can still present you with several options that can allow you to clear up your debts.
You can clear your debts up quickly then proceed with your sponsorship application. This means filing bankruptcy first and then submitting your sponsorship application after your receive your bankruptcy discharge. In Canada, a first time bankrupt could be eligible to receive a discharge from personal bankruptcy in just 9 months. Your bankruptcy can be extended however to 21 months if you have to pay what is called ‘surplus income’. It is important to discuss the likelihood that your bankruptcy will be extended with your trustee before signing any documents.
You can file a consumer proposal which does not have any impact on a sponsorship application. A consumer proposal legally protects you from your creditors the same way a bankruptcy does and helps you to make a negotiated settlement on your debts. There is however one significant difference between a consumer proposal and bankruptcy when it comes to immigration law. A consumer proposal means you avoid having to declare bankruptcy. Since you are NOT bankrupt, you are still free to submit your sponsorship application right away. Talk to your trustee about whether or not you can afford a consumer proposal and if this is a good option for you.
You may also choose to sponsor your loved one now and then file the bankruptcy when your sponsorship application is complete. Given that sponsorship applications could take many months or years to complete, this would be a long time to have to try and hold off your creditors however.
If you have filed bankruptcy already you can talk to your trustee about the possibility of filing a Consumer Proposal even while bankrupt. A successfully accepted consumer proposal will annul your bankruptcy filing freeing you up to be able to submit your sponsorship application. Be aware that you will have to be able to financially support a consumer proposal for this option to work.
Bankruptcy and Citizenship Applications
Unlike with immigration applications, bankruptcy does not affect your efforts to become a Canadian citizen. You can still apply for Canadian Citizenship regardless of whether you have filed a personal bankruptcy before, are still currently bankrupt or are considering bankruptcy.
Filing a bankruptcy does not necessarily restrict your ability to travel either, but you must keep your trustee informed of where you are and how to contact you.
Always check with Citizenship & Immigration Canada for the latest updates to rules and discuss your debt options carefully with a trustee before making your decisions.
Any of our Ontario bankruptcy trustees would be happy to help you review all of these options and how they will apply in your particular situation. Don’t think you have to struggle with debts to avoid jeopardizing your citizenship or sponsorship opportunities.