If I Go Bankrupt Will I Lose My Pension in Canada?
Find out about your pension and Bankruptcy if you are considering entering into bankruptcy in Ontario.
Personal bankruptcy in Ontario is a form of debt relief. It is often considered a last resort for people who are unable to pay back their debts. As with most of life’s challenges, it can be a process of learning, growth, and positive renewal. If filing bankruptcy is the right solution for you, we will hold your hand before, during, and after the process is complete.
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Bankruptcy should never be entered into lightly and should only be considered after consulting with a licensed insolvency trustee. We’ve helped thousands of clients weigh the pros and cons of declaring personal bankruptcy and when needed, navigate this process.
When you are declaring personal bankruptcy in Ontario, you are declaring to the courts and your creditors that you are unable to pay your debts as they come due and have insufficient assets to cover those debts.
When you declare personal bankruptcy, you are permitted to keep certain assets that are exempted by the Ontario Execution Act but are required to submit all other assets for settlement.
In a Consumer Proposal, the person filing is able to keep all their assets (as long as they continue to make any required payments i.e. mortgage payment, car loans etc).
Everyone’s situation is different, depending on your financial situation, some assets may be exempt, including:
In order to be eligible for personal bankruptcy you must be, 18 years of age or older and you need to be insolvent. This means you owe a minimum of $1,000 and cannot afford to make payments when they are due.
Some debts cannot be eliminated through personal bankruptcies. These include child support, alimony, student loans (within 7 years of completing studies) court-imposed fines and fraudulent debt.
Personal bankruptcy eliminates most, if not all, of your unsecured debts. Including any credit cards, lines of credit, personal loans, payday loans, and income tax debt.
Most people we speak to understandably do not want to declare personal bankruptcy or lose the majority of the assets they have worked so hard for. The alternative to personal bankruptcy for individual’s is a Consumer Proposal.
A Consumer Proposal will allow you to keep your assets including your home and cars. However, you must continue to make payments on those assets. In other words, your mortgage and car payments won’t be affected by a Consumer Proposal. The unsecured debts reduced by a Consumer Proposal are credit card debt, personal loans, lines of credit, pay day loans, and similar types of debt.
A Consumer Proposal is a smart decision for debtors with significant assets, who have stable income, or simply just want to avoid bankruptcy and not have it appear on their credit report.
Each year the Superintendent of Bankruptcy outlines what they feel is a basic income for different family sizes. When declaring personal bankruptcy your income and size of your family impacts the amount you will need to pay and for how long. Surplus income is any income earned above the standards set by the Superintendent of Bankruptcy. You are required to pay half of any surplus income you earn above that amount.
If you declare personal bankruptcy, it will not affect your spouse. The only exception to this rule is if your spouse has co-signed or guaranteed your debt, or If you both have a credit card on the same account. It’s also possible that assets with equity held jointly with your spouse, may be affected.
Unless your assets are protected, you will either have to pay to keep your assets or turn them over to the Trustee to be sold for the benefit of your creditors. Your protected assets will typically include all or a portion of:
Bankruptcies are often a ‘last resort’ option reserved for when all other options have been considered. Even then, there are situations where an individual may choose a Consumer Proposal:
The Professionals at David Sklar & Associates will help you to make the decision that best fits your needs.
Not necessarily. Depending on the amount of equity in your home, you may be able to pay the value of the equity to your Trustee for distribution to your creditors. As long as you are current with your mortgage payments, you are normally able to maintain the payment to the secured lender and keep your home. You should discuss this further with your mortgage lender and your Trustee.
If you do not receive a discharge, once the Trustee has completed the administration of your estate and the Trustee has been discharged, you will remain responsible for your debts, plus interest, and your creditors may once again commence collection action against you.
Personal bankruptcies only cover unsecured debts. However, certain unsecured debts are not covered by bankruptcies such as child support, alimony, fines and penalties imposed by the Court, and debts that are found to be fraudulent. Student loans may be covered if the individual ceased to be a student for more than 7 years before filing and meets other requirements. Secured debts such as mortgages and car loans are also not covered in bankruptcies unless you relinquish ownership of these assets. It is always advisable to speak with your Trustee for details on your specific situation.
At David Sklar & Associates, our team is here to help you every step of the way. We not only explain every option available to you, we also give you the tools to help rebuild your wealth. Speak to one of our licensed debt professionals today. Let us show you there is hope and a way to financial freedom! The calls will stop, the stress will disappear, and you can start focusing on your future!
Find out about your pension and Bankruptcy if you are considering entering into bankruptcy in Ontario.
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