If you are having trouble meeting your minimum monthly payments, or you have defaulted on your mortgage or a loan payment, you may be heading for financial trouble. If any of your credit accounts have been sent to collection or you have a letter threatening legal action, you are already in enough financial trouble that will require assistance to fix. The difficult decision to declare bankruptcy in Lethbridge has been taken out of your hands.
At this point, it is irrelevant how your financial problems got out of hand. The important thing is to get them fixed. If you have determined, either on your own or with the help of a professional, that this is your only recourse, you will need to educate yourself on the process of filing for bankruptcy in Canada. When you decide that bankruptcy is your only option, you will be, in essence, surrendering your property and belongings to a bankruptcy trustee in return for the elimination of your unsecured debts.
Declaring bankruptcy in Canada is a legal process, which is overseen by the “Bankruptcy & Insolvency Act” on the Federal level. In order to qualify for bankruptcy in Canada, you must live in Canada, have outstanding debts that total more than $1000.00, and be unable to pay back your creditors. Your first step is to contact a licensed bankruptcy trustee to set up an initial consultation. Bankruptcy trustees are licensed federally and their fees are regulated.
Your first consultation with a trustee will be free of charge and is used to determine not only the amount of your debt but the options available to you in your bankruptcy. Be prepared to answer some hard questions. There will be no place for embarrassment or sugarcoating how bad your situation really is. You need to tell the trustee about ALL of your debt. At this time, you will be informed of which of your debts are eligible to be included in the bankruptcy and which are not.
The rule of thumb is that unsecured debt (i.e. credit card debt) will be eligible for discharge, with the exception of student loans (for a period of 7 years), child support or alimony, and court fines. Secured debts (i.e. house, car, etc.) are not eligible for discharge. However this does not necessarily mean you will lose your house and be living on the streets, especially if you have children. Be aware that if you are permitted to keep your house, your mortgage payments will still need to be met each month and the same goes for your car payments. It would make sense that you’d need to keep your car in order to get back and forth to work if it is determined that you are able to continue with your car payments each month
The length of a bankruptcy is different for each person. In Canada, a bankruptcy is usually fully discharged at the end of a nine-month minimum. How long you will be bankrupt, however, will be determined by whether or not you fulfill your agreed-upon duties to your bankruptcy trustee.
Some duties you will be required to fulfill are the attendance of a creditor’s meeting. This meeting gives your creditors the opportunity to attend and ask about your bankruptcy. Often with a personal bankruptcy, this step is eliminated but sometimes is not. Another of your obligations will be to pay your trustee the agreed-upon fee each month. Other duties may include the surrender of all credit cards in your possession, as well as any non-secured assets, such as furniture etc.
If a discharge is opposed, the matter will go before a Registrar or a Judge. Generally this is not the case in a personal bankruptcy, but you should be aware that the possibility exists. Additionally, if this is your second or subsequent bankruptcy, you will not eligible for an automatic discharge in nine months. These are all things your trustee should explain to you during the process.
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