Bankruptcy

Bankruptcy is one of two viable government-sponsored option for debt reduction/debt relief. (The other one is filing a consumer proposal.) Bankruptcy is for people who:

  • have unsecured (line of credit or credit card) debts not exceeding $250,000 (excluding mortgages)
  • can no longer pay on their debts because they are insolvent (owe more than they earn).
When you file a consumer proposal, your will have an R9 credit rating for 6 years after you have been released. It is possible to rebuild your credit rating to a functioning and acceptable level within the first two years.

The pages in this section give you more information on bankruptcy. These exist to dispel the myth that bankruptcy is the equivalent of failure. It is not. Bankruptcy can be a solution. It can be a strategy. It can mean a new beginning.

Bankruptcy is a legal process that can provide relief to honest but unfortunate debtors. When you are in bankruptcy, no unsecured creditor can garnishee your wages or initiate any other collection action against you.

However, bankruptcies generally do not affect the rights of secured creditors, i.e., those who have a valid security against your property, such as a car or a house.

A bankruptcy can only be filed through a trustee in bankruptcy, an individual licensed by the Office of the Superintendent of Bankruptcy (OSB) to administer the bankruptcy process.

Note: Your own bankruptcy does not affect the liability of anyone who guaranteed or co-signed a loan on your behalf. Your spouse, for example, may be accountable for liabilities incurred jointly with you. It is, therefore, important to make the trustee aware of joint liabilities.

– from The Office of the Superintendent of Bankruptcy Canada.

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