Bankruptcy is a major financial decision, but for many, it’s their only way out of debt. Before you file for bankruptcy, there are a few things you should know about the process.
1) You Need a Bankruptcy Trustee in Ontario
If you’ve decided it’s time to declare bankruptcy, you need a bankruptcy trustee in Ontario, now known as a Licensed Insolvency Trustee. Bankruptcy trustees are licensed by the Canadian government and they are the only professionals who can file bankruptcy on your behalf. That’s what we do at David Sklar & Associates.
2) Disclosing and Assigning Your Assets
One of the first things you will learn about personal bankruptcy from a bankruptcy trustee is that you will need to disclose your assets and assign them to a bankruptcy trustee. The trustee then uses those assets to repay your creditors. Property such as a basic car and a limited amount of equity in your home is exempt. When you come to David Sklar & Associates, we can provide more information about exempt assets and specifically what you may lose.
3) You May Have to Pay Surplus Income
As part of your bankruptcy, you will also have to report your income and living expenses to your bankruptcy trustee. During the bankruptcy process, you may need to pay a portion of any surplus income to settle your debt. Your surplus income is dependent on the size of your family. You can check out the 2018 surplus limits on Bankruptcy Canada.
4) Discharge Time Depends on Certain Factors
Bankruptcy isn’t immediate. There is a period of time in which you will have to pay surplus income. For first-time bankruptcies, usually, you are automatically discharged after 9 months. If you are paying surplus income, it may be up to 21 months before you are discharged. This differs from a consumer proposal in that they can last up to five years, though the processes are different.
5) Bankruptcy Is Your Last Resort
There may be better options than bankruptcy available to you, including consumer proposals. Consumer proposals do not require you to sell any of your assets. Instead, you pay back your debt in fixed monthly payments, potentially with a reduction in how much you owe. Giving up assets such as investments, property, or equity can set you back financially. Save bankruptcy as a last resort. It helps if you book an appointment at David Sklar & Associates sooner than later to discuss alternatives.
If you’re worried about bankruptcy, stop by our office in Ajax, our head office in Toronto, or our location in Mississauga and offices in Brampton. First consultations are free with no obligation. A bankruptcy trustee is here to help you get out of debt.
Get more bankruptcy information before you decide to file. The more you know, the better prepared you will be for the consequences. If you’re struggling with debt, get help sooner than later. The earlier you start, the better off you will be.