There are several reasons why people discover themselves when they sense Bankruptcy is their only option. However, if someone is filing for Bankruptcy, the outcome and goal are always the same: to clear away debt they cannot pay off otherwise.
Learn how to file a Bankruptcy with our step-by-step instructions.
Take into account your financial situation.
“Is it necessary to file for Bankruptcy?” This is the first query to ask yourself before filing for Bankruptcy. Your primary task is to collect all your financial documents like bank statements, credit reports, tax returns paper, and any other documents related to your assets, debts, or income, so you understand the present state of your finances.
Each financial situation is unique, but the following signs are a strong indicator that some intervention is needed:
- You have skipped loan or mortgage payments.
- Your credit cards are almost at their limit.
- You get intimidating calls from various collection agencies.
- You have been notified of legal action against you to collect your debts.
Consult with a Licensed Insolvency Trustee.
Licensed Insolvency Trustees are the only people authorized by the Canadian Superintendent of Bankruptcy to aid bankruptcies. To declare Bankruptcy, you must work with a Licensed Insolvency Trustee, as they are the ones who can stop on-going and pending legal and collection activity. When choosing your trustee, you need to keep the following in mind:
- Your LIT should be local or should be easily accessible.
- You should feel relaxed with your trustee. Feel free to ask questions about your condition and ensure you understand their answers.
- Confirm that the Superintendent of Bankruptcy licenses them.
Take Credit Counselling Courses.
Every person who files for Bankruptcy must undergo a credit counselling course six months before filing their bankruptcy petition with the court. The course has to be taken via a credit counselling agency that the Department of Justice approves. The procedure takes at least one hour and can be finished online or by telephone, with a fee ranging from $10 to $50, depending on the provider. Once you complete the course, you get a certificate of completion.
File the paperwork for Bankruptcy.
The Licensed Insolvency Trustee (LIT) assists with completing the mandated forms to declare Bankruptcy. Filing for Bankruptcy in Canada needs various forms, such as:
- An “Assignment” in which you declare that your bankruptcy LIT is taking control of your property for the advantage of your creditors.
- A “Statement of Affairs” that shows your assets, liabilities, revenue, and expenditures.
The bankruptcy forms contain at least 23 separate forms, totalling roughly 70 pages. Supporting documents to provide include:
- Tax returns.
- Proof of income and expenses of you and your family.
- Evidence of any assets owned by you.
Your LIT registers your Bankruptcy with the Office of the Superintendent of Bankruptcy. Keep copies of notices and all other bankruptcy papers. When you are ready, you sign the documents, and your Bankruptcy begins.
What Happens Once You File for Bankruptcy
Once your Bankruptcy is filed, there is a quick “stay of proceedings.”
Within five days of the Bankruptcy, your Licensed Insolvency Trustee will send a copy of the bankruptcy paperwork to creditors so that they can file a claim.
The Trustee files outstanding tax returns up to the date of Bankruptcy.
You will have specific duties that you have to accomplish during Bankruptcy. Bankruptcy purports to discharge the insolvent debts, but during the case, the debtor must:
- Surrender assets
- Indulge your credit cards
- Attend credit counselling sessions
- Deliver monthly income statements
- Remit your payments on time
What Happens After Bankruptcy?
Once your Bankruptcy is discharged, your debts are cancelled. A note about your Bankruptcy will remain on your credit report for at least six years after discharge or fourteen years if this is not your first Bankruptcy. In most circumstances, your Bankruptcy is discharged in 9 months.
Since the beginning, Dana MacRae, Licensed Insolvency Trustee, has supported thousands of Canadians with financial restructuring programs that conquer debt and put you back on track to revamping your worth. At Dana MacRae, we examine your financial situation and provide the best possible solution accordingly. Contact Dana MacRae for more details at 1-800-665-9965.