Category : Misc
Bankruptcy is a legal process that can provide a relief to honest unfortunate individuals who are unable to pay their debts.
If you are considering bankruptcy, your first step should be to meet with a licensed insolvency Trustee(LIT). LIT’s are individuals licensed by the Office of the Superintendent of Bankruptcy (OSB) to administer the bankruptcy process.
The job of a LIT is to evaluate your financial situation and discuss various alternatives that could help you solve your current financial situation.
What Happens if you file for bankruptcy?
If bankruptcy is the option you choose, you will work with the LIT to complete the required forms. The LIT will then file these documents with the OSB and you will be formally declared bankrupt.
From that point on, the LIT will deal directly with your creditors on your behalf Once you have been declared Bankrupt.
- You will stop making payments directly to your unsecured creditors.
- Any garnishments against your salary will stop; and
- Any lawsuits against you by your creditors will also be stopped.
Your assets will be sold by the licensed insolvency Trustee
Once you have been declared bankrupt, the LIT sells your assets, including any acquired during your bankruptcy. Assets that are exempted by provincial and federal laws are excluded from this sale. The LIT will hold the money raised by the sale in trust for distribution to your creditors.
Your creditors will be notified
After you declare bankruptcy, the LIT will notify all your creditors about your bankruptcy.
Your creditors may hold a meeting
Sometimes, a meeting of creditors is required or requested. At the meeting, creditors can obtain information about the bankruptcy and give direction to the LIT. If a meeting is called, you will be required to attend.
You may be examined by the OSB
After you file for bankruptcy, a representative of the OSB may examine you under oath. The purpose of these examination is to ask you about your conduct, the causes of the bankruptcy and the disposition of your property.
What will you be responsible for.
You will have to attend two financial counselling sessions
In addition to paying the LIT’s fees, you may be required to make additional payments to your LIT for distribution to your creditors. These are called surplus income payments.
Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. The amount is set by the OSB annually. The larger your family, the more you are allowed to keep, the more you earn, the more you are required to contribute.
If your surplus income is more than $200 per month, you will be required to contribute 50 percent of that amount.
When will you be discharged from bankruptcy
A discharge releases you from legal obligation to repay the debts you had as of the date you filed for bankruptcy, except for specific types of debts that are excluded by law. These include alimony and child support payments, court order fines or penalties and debts arising from fraud.
The timing of your discharge depends on a number of factors, including whether this is your first bankruptcy, and whether you are required to make surplus income payments.