Personal Bankruptcy

Personal bankruptcy is one of two options available to people under the Bankruptcy and Insolvency Act (“BIA”) and is usually done when no other options are left, either outside or inside the BIA. Bankruptcy gives you protection from your creditors. They cannot sue you for non-payment, or if they have a court order and are garnishing your wages, bank account or some other asset, this is stopped when you file the assignment.

When you assign yourself into bankruptcy, it means the trustee (the person or firm who does the bankruptcy process) must deal with all your assets. In theory, assets are sold and the proceeds are used to pay the fees of the trustee and pay dividends to your creditors. In reality, most debtors have no realizable assets, some assets are exempt, and some assets cannot be sold or used to recover funds. Those assets that have value will usually either be redeemed/sold or the debtor can purchase the estate’s interest. In our London office, people who file bankruptcy are aware of the effect on all their assets.

The income of the bankrupt’s household is also monitored every month during the bankruptcy period. If the income is over the standard set by the Superintendent of Bankruptcy, then a percentage of the amount over the standard amount must be paid to the trustee. This payment is required until the bankrupt receives a discharge.

The goal of bankruptcy is to obtain a discharge. This document is issued in nine months if you have never been bankrupt before and means that the bankrupt is released from the obligation to pay the all debts. Some debts such as student loans or alimony or support payments are not dischargeable and will need to be repaid during or once the bankruptcy is completed. Should someone oppose the discharge, it is necessary to obtain the discharge through the court system.

A creditor, the trustee or the Superintendent of Bankruptcy can oppose the discharge. The trustee will oppose if the bankrupt does not do their duties. Duties are outlined at the start of the bankruptcy and may include: submission of income tax information for completion of income tax returns, submission of monthly income and expense statements, completion of two counseling sessions on financial matters, and payment of fees and/or surplus income. The court is very supportive of the BIA in requiring bankrupts to complete these duties prior to receiving a discharge.

Bankruptcy is an equitable and transparent method of relieving yourself of your debts. It means creditors are treated equally, but all transactions made by you in the last year and until you are discharged can be reviewed and monitored. It means disclosure of all your assets and all your debts. It protects you from your creditors, but provides a process that means they receive the most funds available from your assets and income in an equal manner.

There are many types of situations and issues that need to be discussed when thinking about the bankruptcy process. You can check in from time to time at the Bankruptcy London website to see what issues are current in the London area. If you are experiencing financial difficulties, talk to a professional at Hoyes Michalos & Associates Inc. about your situation by calling us in London at 519-435-1500 or 310-PLAN.