Ontario Bankruptcy FAQs; Ontario Bankruptcy Questions & Answers; FAQ.

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Ontario Personal Bankruptcy FAQs and Personal Proposals FAQs

Can I deal with my financial problems without declaring bankruptcy? What should I look for when meeting a bankruptcy trustee? What should I gather from an initial meeting with a bankruptcy trustee? What is a consumer proposal and how can it help me? What are the benefits of a consumer proposal? I can't afford to pay my student loan. What can I do? What exactly is bankruptcy? Who will know I have filed bankruptcy? How is my spouse affected? Will my creditors stop harassing me?

Will Canada Customs and Revenue Agency agree to a proposal for tax owed? What happens to assets that I've borrowed against? What about income tax and GST refunds? Am I allowed to have a bank account? How do I rebuild my credit after bankruptcy or consumer Proposal? What are the early warning signs of financial difficulty? How will I know which option is best for me? How will a consumer proposal or bankruptcy affect my credit rating? What is a "discharge" from bankruptcy? What debts are erased by bankruptcy? What does a bankruptcy cost?

 

Bankruptcy trustees are the only debt professionals who can provide a full range of debt relief solutions.

It depends on the seriousness of your financial problems and your disposable income. Ontario bankruptcy trustees are the only debt professionals, in Ontario, who can provide a full range of debt relief solutions. We will explore all options available to you, including debt negotiation; debt elimination and debt consolidation loans; and consumer proposals.

 

Make sure you are comfortable with your trustee.  After all, they are the people who will be guiding you through a very challenging period in your life.

Not every licensed bankruptcy trustee is the same. Make sure you are comfortable with your trustee.  After all, they are the people who will be guiding you through a very challenging period in your life.

The most important things you should look out for are:

 

What should I gather from an initial meeting with a bankruptcy trustee?

After a first meeting, you should have a good understanding of what you need to do to regain your financial security and peace of mind. You should also have a complete picture of your financial position, including the amount of your debts, the value of your assets, your monthly income and expenses, the options available to you, and what may happen to your various assets under different options.

 

A consumer proposal allows you to avoid bankruptcy while paying only a portion of your debt.

This PowerPoint presentation outlines the Consumer Proposal process.

A proposal is an arrangement between you and your creditors that lets you pay only a portion of your debts and/or extends the time you have to pay off your debts. When you file for a proposal, interest generally stops on most debts while your creditors review your proposal and decide if they should accept it. After a proposal is accepted and you make the agreed-upon payments, your debts are considered to be settled in full. Plus, through a proposal you get to retain all your assets and reduce your debt load.

 

Ontario Bankruptcy FAQ's Top

With a consumer proposal, you get to tailor your monthly payments to suit your situation. You also:

• Keep your assets and accumulate more without risk of seizure;
• Stop calls from creditors and debt collectors;
• Stop making interest payments;
• Stop most lawsuits and garnishments;
• Can pay only a portion of your debts;

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Student Loans can be erased in a bankruptcy if the student was in school 7 or more years ago. This amendment will apply where the debtor obtains his or her discharge on or after July 7, 2008 (PROVIDED that at the time they filed they had ceased to be student for the required seven years) or the debtor had or becomes bankrupt on or after July 7, 2008. 

The amendment that will reduce to five years the period a bankrupt will have to wait to make a “hardship” application to have student loan debt or obligation discharged (BIA , s. 178 (1.1)) is also now in force.  This amendment applies to all debtors notwithstanding when the bankruptcy or the process that results in the bankruptcy is initiated.

 

The main purpose of Canada's bankruptcy laws is to provide a fresh financial start for an honest but unfortunate debtor.

This PowerPoint presentation outlines the Personal Bankruptcy process.

Bankruptcy is a legal process that immediately stops all collection efforts and legal actions by your unsecured creditors, including asset seizures, and wage garnishments. It gives you the opportunity to free yourself from debt and start over. The process includes counselling sessions to help you regain control over your finances. In some cases, you can even keep certain assets, like your house or car.

The purpose of Canada's bankruptcy laws is to provide a fresh financial start for an honest but unfortunate person trapped in an untenable debt situation, while treating your creditors in a fair and reasonable way.

 

Who will know I have filed bankruptcy?

Unless you are a prominent person the chances are that the only people who will know you have filed bankruptcy will be your creditors.

Unless you are a prominent person the chances are that the only people who know you have filed will be your creditors. In a bankruptcy, where there are significant assets, a notice is placed in the "legals" section of the newspaper notifying creditors of the date of the meeting of creditors. If there are minimal assets, the creditors are notified by mail only - there is no advertisement in the "legals" section of the newspaper.

 

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What does a bankruptcy cost?

In the vast majority of cases the cost of a bankruptcy is regulated by the government and is less that $200 a month for each of 9 months.

We offer a free initial consultations. In most cases you will be allowed very affordable terms to pay the modest costs.

In the vast majority of cases the cost of a bankruptcy is regulated by the government and is less that $200 a month for each of 9 months.

 

How is my spouse affected?

Your spouse, whether common law or married, will not be affected by your bankruptcy if he or she is not responsible for any of your debt.

Your spouse, whether common law or married will not be affected by your bankruptcy if he or she is not responsible for any of your debt (did not sign an agreement or contract for any of your debt). If they have a supplemental credit card they are probably responsible for that debt. Your spouse's credit rating will not be affected by your bankruptcy and any assets in the spouse's name will not be part of the bankruptcy.

If your spouse is responsible for any of your debt or has his own debt then the spouse may have to file bankruptcy too.

 

Will my creditors stop harassing me?

By law, all actions against a bankrupt or a person filing a proposal must cease once the documents are filed.

Yes, they will! By law, all actions against a bankrupt or a person filing a proposal must cease once the documents are filed. This does not apply to secured creditors such as banks holding, for example, a lien on a car.

 

 

We will review all your options and advise the one best suited to deal with your situation.

Whether you file a consumer proposal, declare bankruptcy or exercise another debt relief solution, each option has advantages and disadvantages, depending on your personal circumstances. We will review all your options and advise the one best suited to deal with your situation.

The A. Farber & Partners team of managers and Ontario bankruptcy trustees will work with you and your creditors to resolve your financial difficulties, in a non-judgmental, caring and compassionate manner.

 

Ontario Bankruptcy FAQ's Top

If your debt payments are significantly in arrears, the credit bureau has probably already been notified. When a bankruptcy or proposal is filed, the credit bureau is notified again. A first-time bankruptcy stays on your record for six years after the date of your discharge, and a second bankruptcy for 14 years. A proposal stays on record for three years after you've satisfied your proposal.

 

Up to $34,000 of equity in assets can be retained in a bankruptcy, in addition to certain pension plans and insurance policies.

In addition, to company pension plan amounts, RRSPs in insurance companies, and cash surrender value of life insurance policies where the beneficiary is your spouse, child, grandchild, or parent, you can keep the items listed below. Most other assets are valued by the trustee and sold unless you make arrangements with the trustee to keep and pay for them. You might also be able to keep assets secured by a bank or finance company if you make arrangements with the creditor.

The current exemptions in Ontario are as follows:

The majority of people are discharged, or out of bankruptcy in 9 months, at which time most debts are erased.

This discharge is the legal process within a bankruptcy that releases you from your debts.

The discharge terms are as follows:

- 9 month automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have excess income.  e.g. less than $3,062.00 a month take home pay for a family of 3. (Note: 1)

- 21 months (or more at the court's discretion) for 1st. time bankrupts who fulfill all their duties. and who have excess income. e.g. more than $3,062.00 a month take home pay for a family of 3. (Note: 1)

-24 months for 2nd time bankrupts who do not have excess income.. e.g. less than $3,062.00 a month take home pay for a family of 3. (Note: 1)

-36 months for 2nd time bankrupts who have excess income. e.g. more than $3,062.00 a month take home pay for a family of 3. (Note: 1)

-Bankrupts with personal income tax debt of $200,000.00 or more representing 75 percent or more of total unsecured claims, are not eligible for an automatic discharge. They must go to court for an adjudication.

Note: 1 Surplus Income Standards for 2009/10

 

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Almost all unsecured debt is erased in a bankruptcy.

Bankruptcy relieves the honest person of almost all common debts, including credit cards, bank loans, and debts owed to the Canada Revenue Agency (CRA).

The following debts can't be erased:

• alimony and child support;
  
• damages awarded for bodily harm, sexual assault, or wrongful death;
  
• fines, including traffic violations;
  
• liabilities arising out of fraud; and
  
• student loans if you have been out of school for less than 7 years.
  
  

 

CRA will agree to a proposal if it makes economic sense to them.

In most cases, Canada Revenue Agency (CRA) is treated like a regular creditor, and can accept or reject your proposal like other creditors. CRA has also recently set up special bankruptcy teams to deal with these situations, and review your prior tax payments.

 

Secured creditors, like banks, credit unions, and finance companies can collect against the asset you've borrowed against even if you declare bankruptcy. If there's no value in the asset, the trustee will release its interest. If you want to keep the asset, you can make arrangements with the secured creditor.

 

 

When you declare bankruptcy, your trustee must file a tax return from January 1st to the date of your bankruptcy, and the previous year's tax return (if it hasn't already been filed). The trustee may also file a tax return from the date of the bankruptcy to December 31st. If any of these returns generate tax refunds, that money will be used to pay off your debts.

 

Ontario Bankruptcy FAQ's Top

Yes. However, any cash balance in your account on the date of your bankruptcy must be turned over to the trustee. You can only keep the amount you need for your day-to-day living expenses.

 

 

 

 

 

At A. Farber & Partners, we have creative options to help you obtain credit after bankruptcy or a consumer proposal.

During a bankruptcy or a proposal, you'll receive counselling to help you rebuild your credit. To improve your credit, it helps to have a stable employment history, and evidence of a stable or growing income, the ability to save or accumulate assets, and the knowledge of how to manage money effectively. Having a co-signor also helps, as does adhering to all your credit contracts, such as paying your car loan or lease, making mortgage payments, etc.

At A. Farber & Partners, we have creative options to help you obtain credit after bankruptcy or a consumer proposal.

 

If you answered yes to any or all of these questions, you may benefit from the advice of our counsellors or bankruptcy trustees. Remember, the sooner you address your financial problems, the more options you have.

Possible solutions could include: