What is personal bankruptcy?
If you're struggling to pay your debts, filing for personal bankruptcy may be your best option. Although it's a legal process and a right that Canadians have, many people are not familiar with it. The biggest misconception about personal bankruptcy is that it's for people who spend beyond their means or those who are not good with money.
Although this is partly true for some people, many Canadians have debt problems but don't fit this category and choose to file for personal bankruptcy anyway. The reality is that if you're struggling to pay your bills and creditors are hounding you, bankruptcy may be your best option. The bankruptcy process is the last resort but it's also a legal process that you can use to clean the slate.
What needs to be done in order to file for bankruptcy?
It's natural to feel overwhelmed when considering personal bankruptcy. In Canada, only a licensed insolvency trustee can administer the bankruptcy. Trustees are experienced in helping people through this tough process and can make it easier for anyone.
First, you will need to gather some financial documents. Next, you will need to meet with the licensed insolvency trustee who will listen to your situation, ask you some questions and then give you advice on your options. The Trustee will work with you to pick the best option for you. For the initial meeting with the Trustee, there is no charge.
If you decide to go forward with personal bankruptcy, the Trustee will prepare all the paperwork you need to file an assignment in bankruptcy.
What is the average length of time for discharge?
Personal bankruptcy is a scary topic in Canada everyone's path to bankruptcy Is different. I try to answer the most frequently asked questions to lower your stress level and give you good information.
For a person who is bankrupt for the first time if they do not have what is called surplus income, they are entitled to a discharge after nine months. If they have surplus income it becomes 21 months.
If it is a second time or more personal bankruptcy the timeline is extended to either 24 months or 36 months depending on surplus income.
This assumes that you do not owe the Canada Revenue Agency $200,000 or more of unpaid income tax in the bankruptcy and that you have fulfilled all of your bankruptcy duties.