IntroducingYour Complete Guide to Bankruptcy Law Canada

Declaring bankruptcy in Canada is a process that can provide individuals with a fresh start and relief from overwhelming debt. When you declare bankruptcy, you must surrender control of your assets to a licensed Trustee, who is responsible for managing your bankruptcy and distributing your assets among your creditors. The Trustee will also ensure that you meet your obligations under the Bankruptcy and Insolvency Act.

One of the main benefits of declaring bankruptcy is that your unsecured creditors can no longer attempt to collect from you. Additionally, your credit score will be affected for up to seven years after you are released from bankruptcy. This can make it difficult to obtain credit in the future, but it also provides you with a clean slate to begin rebuilding your credit.

As part of the bankruptcy process, you must attend credit counselling and follow the rules set by the Trustee. This may include making payments to your creditors through the Trustee or participating in a debt management plan. After 9 months to 21 months, depending on your income, you will be released from most of your debts. However, some debts, such as student loans and fines, are not dischargeable in bankruptcy.

Declaring bankruptcy is not a decision that should be taken lightly, but it can provide much-needed relief for individuals who are struggling with debt. If you are considering declaring bankruptcy, it is important to speak with a licensed Trustee or a financial advisor to understand your options and the consequences of this decision.

What assets are exempt from bankruptcy in Canada?

Certain assets may be exempt from seizure during bankruptcy and are protected under the Bankruptcy and Insolvency Act. The purpose of these exemptions is to provide individuals with some basic necessities and tools needed to start over after bankruptcy.

Below are some things that might not be seized:

• Personal items, such as clothing, household goods, and furniture, up to a certain value.
• Tools of the trade, such as tools and equipment needed for work, up to a certain value.
• Public benefits, such as employment insurance, workers’ compensation, and social assistance.
• Registered Retirement Savings Plans, Registered Pension Plans, and Locked-In Retirement Accounts
• Equity in a primary residence, up to a certain value.
• Pre-authorized contributions to a Registered Retirement Savings Plan, Registered -Pension Plan, or Locked-In Retirement Account.

It is important to note that these exemptions may vary by province and territory, and the value of the exemptions may change from time to time. In addition, if you have assets that are not covered by the exemptions, your Trustee may be able to sell them and use the proceeds to pay your creditors.

How long does bankruptcy stay with you in Canada?

Bankruptcy in Canada stays on your credit report for six years from the date of discharge or up to 14 years from the date of filing, depending on the credit bureau. This means that future lenders, landlords, and others may be able to see that you have filed for bankruptcy. However, after the bankruptcy has been discharged, you can begin to rebuild your credit and improve your credit score.

It is possible to obtain credit again after bankruptcy, but you may face higher interest rates and may need to make larger down payments on loans or mortgages. To help rebuild your credit, you can apply for a secured credit card, use a co-signer, or get a loan from a credit union. Additionally, it is important to make timely payments and manage your credit responsibly to demonstrate to future lenders that you are able to manage your finances responsibly.

Can you be denied bankruptcy?

Yes, you can be denied bankruptcy in Canada. There are certain criteria that must be met to be eligible for bankruptcy, and if these criteria are not met, you may be denied bankruptcy. For example, you must owe at least $1,000 to your creditors and have insufficient assets or income to pay off your debts.

Additionally, if you have made a previous bankruptcy claim within the past seven years, or if you have engaged in fraudulent activities or transferred assets with the intent of avoiding creditors, you may be denied bankruptcy. The final decision to grant or deny bankruptcy is made by a licensed insolvency trustee, who will evaluate your financial situation and make a recommendation to the courts.

If you are denied bankruptcy, you may need to explore alternative debt relief options such as a consumer proposal or debt consolidation.

Bankruptcy and Insolvency Act General Rules

The Bankruptcy and Insolvency Act is the primary federal legislation that governs bankruptcy in Canada. It sets out the rules and procedures for bankruptcy, including eligibility criteria, duties of debtors, and powers of trustees.

Below are some of the key rules you should know:

• To be eligible for bankruptcy, an individual must owe at least $1,000 to creditors and have insufficient assets or income to pay off debts.
• Upon filing for bankruptcy, all collection actions and legal proceedings against the debtor are automatically stayed, except for those related to child or spousal support.
• The debtor must attend two financial counselling sessions, provide a complete list of creditors and assets, and attend a meeting of creditors.
• Trustees are appointed by the courts to manage the bankruptcy process and are responsible for selling assets, distributing funds to creditors, and ensuring compliance with the BIA.
• A discharge from bankruptcy typically occurs after 9 months for a first-time bankruptcy and 24 months for a second-time bankruptcy. Once discharged, the debtor is no longer legally obligated to pay most unsecured debts.

If you are looking for the Bankruptcy and Insolvency Act on CanLII, here it is.

How to do a Bankruptcy and Insolvency Act Search

Visit the Government of Canada's website. Go to the Government of Canada's website at canada.ca and search for the "Bankruptcy and Insolvency Act."

You can also search for the BIA using a search engine such as Google. Simply enter "Bankruptcy and Insolvency Act Canada" and click on the search button.

You can access the BIA on the Justice Laws website by visiting laws.justice.gc.ca and searching for the "Bankruptcy and Insolvency Act."

Once you have located the BIA on the government website, you can read the act in its entirety. The BIA is a lengthy document and can be complex to understand, so it may be helpful to consult with a licensed insolvency trustee to interpret the provisions and understand their implications.

By performing a search of the BIA, you can learn more about the rules and procedures for bankruptcy in Canada, including eligibility criteria, duties of debtors, and powers of trustees.