Bankruptcy Process in Canada

What are the Steps in the
Bankruptcy Process?
BankruptcyCanada.com

Table of Contents
• Page 3: The Bankruptcy
Process in Canada
• Page 4: Step 1 - Realize that you need help:
• Page 5: Step 2 - Set up a meeting with a local
Licensed Insolvency Trustee
• Page 6: Step 3 - Fill out an application
• Page 7: Step 4 - The bankruptcy is filed
• Page 9: Step 5 - Creditors are notified
• Page 10: Step 6 - Non-exempt Assets Will be
Sold
• Page 11: Step 7 - Required Payments are
Made to the Trustee
• Page 12: Step 8 - Attend the Required Credit
Counselling Sessions
• Page 13: Step 9 - Final Reporting
• Page 14: Step 10 - Receive your discharge

The Bankruptcy Process in Canada
• The bankruptcy process in Canada is fairly
straightforward.
• You are required to use the services of a
Licensed Insolvency Trustee in order to begin
the bankruptcy process.

Step 1 in the Bankruptcy Process
Realize that you need help
• The first step in the bankruptcy process is
realizing that you are facing money problems
and that you need professional help to get
your finances back on track.
• Admitting this fact is the hardest part of the
entire bankruptcy process for the vast majority
of individuals.

Set up a meeting with a local
Licensed Insolvency Trustee:
• After you have made the decision to seek help with your
debt you will need to set up a free, confidential
consultation with a local insolvency trustee from your area.
• The trustee will help you review your financial situation and
give you the pros and cons of each debt relief option
available to you.
• Depending on your amount of debt and/or income,
certain bankruptcy alternatives might not be viable for you.
• Your trustee will help you make an informed decision on
whether bankruptcy is the best choice for you or if there is
a better option based on your personal finances.

Fill out an application
• If you and your trustee decide to proceed with
going bankrupt the next step will be to fill out the
application.
• Your trustee will provide you the application and
will give you the time to complete the application,
which should take 20 minutes or so to be
completely filled out.
• If you are uncomfortable with filling out the form
on your own your trustee can arrange for
someone to help guide you through the
application paperwork.

The bankruptcy is filed
• When you have completed your application form
and return it to your trustee you will file for
bankruptcy.
• After the trustee receives your filled out
application form he or she will begin preparing
the documents that must be signed to declare
bankruptcy.
• The trustee will file your documents with the
Office of the Superintendent of Bankruptcy (OSB)
and once this occurs you will officially be
bankrupt.

The bankruptcy is filed
• When you go bankrupt you will receive your
automatic stay, which is a legal order that
prevents your creditors from contacting you
for any reason, and will stop wage
garnishments and allow you to breathe again.
• Harassing phone calls will stop, your wage
garnishment will end, or wage garnishments
that are being considered will halt, and your
creditors won’t be able to collect on your
debts at this point of the bankruptcy process.

Creditors are notified
• At this point in the process your trustee will
notify the creditors that were included in your
bankruptcy paperwork (your unsecured
creditors) that you have filed for bankruptcy.
• In rare cases, your creditors might call for a
creditors’ meeting, that you must attend.
• The purpose of the creditors’ meeting is to
give your creditors an opportunity to learn
more about your financial situation and the
details of your bankruptcy.

Non-exempt Assets Will be Sold
• Before you sign the documents to go bankrupt your
trustee will explain to you any assets you own that you
will lose in bankruptcy.
• At this point in the bankruptcy process, your trustee
will collect these assets from you and then sell the
property and distribute the funds amongst your
creditors.
• Your trustee might not bother with selling non-exempt
assets if s/he thinks there will be no net gain realized;
for example, if you have a car that is not protected by
the bankruptcy exemptions that is worth $1,000, your
trustee will likely allow you to keep the car if it would
take $1,000 or more to prepare the vehicle for sale.

Required Payments are Made to the Trustee
• A bankrupt must make regular payments to
their trustee to cover the administrative costs
of filing bankruptcy and your Trustee’s time.
• If you have a high income you might be
required to pray surplus income payments.
The cost of filing bankruptcy will vary for each
debtor.

Attend the Required Credit Counselling Sessions
• As part of your bankruptcy duties you will be
required to attend two credit counselling
sessions that will help you understand the
causes of your bankruptcy and help you
manage your money successfully in the future
so you can avoid bankruptcy.
• The credit counselling can be done one-on-
one with your trustee or you can attend a
group counselling session with other debtors
who are working with your trustee.

Final Reporting
• If you do not complete all of your bankruptcy
duties your trustee will prepare a report to
give to the OSB and your creditors before you
receive your bankruptcy discharge, and you
might be required to attend a court hearing.
• However, most debtors receive an automatic
discharge and this reporting is not required.

The final step in the bankruptcy process is
to receive your discharge
• Once you have received your bankruptcy discharge
your debts (those that were included in your
bankruptcy) will be eliminated and you will have a
chance to begin rebuilding your financial life.
• The bankruptcy discharge is what releases you from
the legal obligation to repay your debts.
• In rare cases, a discharge hearing may be required and
will happen only if the OSB or one of your creditors
objects to your bankruptcy discharge.
• If you would like to speak to a local Licensed
Insolvency Trustee to learn more about the
bankruptcy filing process please contact our team
today.

Bankruptcy Process in Canada

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Bankruptcy Process in Canada