Personal bankruptcy is an option to permit an honest and unfortunate debtor to eliminate their debt in order to make a fresh start. It is not an easy decision for anyone to make but staggering debt can impact your health, employment and family relationships. The key is to take the first step and obtain the facts.
What is personal bankruptcy?
- Personal bankruptcy is a legal process whereby you assign your assets to a Licensed Insolvency Trustee to allow you to eliminate your debts at the end of the process.
- You are entitled to keep assets which are exempt under the provincial laws where you live. See list of exempt assets for BC under the FAQ section of our website. You may be permitted to pay the trustee over time for any non-exempt assets you wish to keep or exempt assets where the value exceeds the limits allowed by law.
- It is more common than you think. The 2017 statistics from the Office of the Superintendent of Bankruptcy indicate there were 60,669 (2016 – 63,372) individuals that filed bankruptcy in Canada, of which 4,263 (2016 – 4,719) were in BC.
When to consider personal bankruptcy?
- You have minimal or low income and are unable to make your minimum monthly payments or are relying on credit.
- You are unable to consolidate your debts with your bank.
- You have a garnishee or assets are under seizure.
- You will be unable to pay your debt off within 5 years.
- You have received notice of foreclosure on your home and are unable to sell to pay out the mortgage.
What is surplus income and how does it affect my bankruptcy?
- Surplus income is your portion of your family’s net monthly income that is over the amount set by the Office of the Superintendent of Bankruptcy annually as a standard of living. See current year form for Superintendent Standards on our Resources page.
- You are required to pay 50 percent of your portion of family surplus over $200 per month to your Licensed Insolvency Trustee during the period of your bankruptcy. The surplus income payable is based on your average net monthly earnings during the period of bankruptcy so it will adjust for changes in your income level.
- The Office of the Superintendent of Bankruptcy has an informative video on surplus income at https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br03572.html.
- The length of your bankruptcy is generally an additional twelve months where you have surplus income to enable your creditors to obtain some recovery of their debt.
What are the benefits of filing bankruptcy?
- There is an immediate “stay of proceedings” that stops calls from your creditors, wage assignments and/or garnishees.
- You may obtain a discharge from the legal obligation to pay your debts at the end of the process.
- You no longer have to pay your creditors but pay only your average surplus income as defined under the Act. Surplus income is an average of your income during the entire period of bankruptcy so if your income decreases, your average surplus income will decrease as well.
- If your financial situation improves, you may be able to convert your bankruptcy to a consumer proposal.
What are the basic steps in filing a bankruptcy?
- Meet with a Licensed Insolvency Trustee to obtain a financial assessment and review the pros and cons of your options to determine if bankruptcy is right for you.
- Complete an application form and provide supporting documents relating to your financial matters to your Licensed Insolvency Trustee. They will prepare the necessary legal documents for your bankruptcy.
- Meet with the trustee to sign the legal documents and review your duties as a bankrupt. The trustee will notify your creditors once you have filed.
How do I obtain more information?
- Take the first step and contact D. Kwasnicky & Associates Inc. for a free personal financial assessment to determine if bankruptcy is the best option for you.
- There is no commitment. You can walk away with the comfort of knowing you have obtained financial advice and made a decision that is right for you.
- You can also check out the free information available to individuals on Personal Bankruptcy on the Office of the Superintendent of Bankruptcy website at https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02048.html.