Personal Bankruptcy in Ontario
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Personal Bankruptcy in Ontario Can Help You Get Relief From Debt
Personal bankruptcy in Ontario is a legal debt relief option that can eliminate many unsecured debts and help you regain control of your finances. It can provide relief from overwhelming debt and give you a path toward a fresh financial start.
Only a Licensed Insolvency Trustee can administer bankruptcy in Canada. At David Sklar & Associates, our Ontario Licensed Insolvency Trustees can review your situation and help you understand if personal bankruptcy is right for you.
Find out if personal bankruptcy is right for you
Bankruptcy explained: Simple Answers to Common Questions
Personal bankruptcy does not have to be complicated. Explore our simple guides to understand how bankruptcy works in Ontario and get clear answers to the questions we hear most often.
What Is Personal Bankruptcy in Ontario?
Personal bankruptcy is a legal debt relief process that can eliminate many unsecured debts you can no longer afford to repay. In Canada, bankruptcy and consumer proposals are formal options available under federal insolvency law.
If you’re experiencing financial hardship, you have the right to seek forgiveness of your debts under the Bankruptcy and Insolvency Act (BIA). The BIA governs the entire bankruptcy process in Canada, outlining rules and requirements for all parties involved.
Why Consider Personal Bankruptcy in Ontario?
Personal bankruptcy may be an option when debt payments become unaffordable and other debt solutions are no longer practical.
High interest debt, job loss, reduced income, unexpected expenses, or major life changes can make it difficult to keep up with payments. Over time, using credit to cover everyday expenses can make the debt problem even harder to manage.
Filing for bankruptcy can provide meaningful debt relief, but it is important to understand the benefits, consequences, and alternatives before making a decision. A Licensed Insolvency Trustee can help you compare your options.
What Debts Are Not Eliminated by Personal Bankruptcy in Ontario?
- Secured debts on assets you keep, such as a mortgage or car loan
- Child and Spousal Support Payments
- Court ordered fines and penalties
- Student loans if you stopped being a student less than seven years ago
- Certain debts resulting from fraud or misrepresentation
What to Expect When You File for Personal Bankruptcy in Ontario
If you decide to file for personal bankruptcy in Ontario, our Licensed Insolvency Trustees will guide you through each step of the process. We’ll help with the paperwork, communicate with your creditors, and make sure you understand what to expect along the way.
Here’s what to expect during the personal bankruptcy process:
The 5-Step Personal Bankruptcy Process
Finding Hope - A Real Client Story
A single mother’s journey to debt freedom
In this heartfelt testimonial, Roxanne a single mother, shares her emotional journey from overwhelming stress and fear of financial failure to finding relief and support through David Sklar & Associates. Struggling with mounting debts from payday loans, credit cards, and personal loans.
How Personal Bankruptcy Protects You From Creditors
When you file for personal bankruptcy, a stay of proceedings provides legal protection from most unsecured creditors. Collection calls, wage garnishments and legal actions related to those debts generally stop.
Bankruptcy can eliminate many unsecured debts and give you an opportunity to rebuild your finances. For many people, it provides the financial reset needed to move forward with greater control over their money.
What to Know Before Filing for Personal Bankruptcy in Ontario
How Long Does Personal Bankruptcy Last in Ontario?
The length of personal bankruptcy depends on whether it is your first or second bankruptcy and whether you are required to make surplus income payments. A first bankruptcy can last 9 months, or 21 months if surplus income applies. A second bankruptcy can last 24 months, or 36 months if surplus income applies.
What Are My Duties During Personal Bankruptcy?
During personal bankruptcy, you have certain duties under the Bankruptcy and Insolvency Act, including:
- Disclosing your assets and surrendering non exempt assets when required
- Surrendering your credit cards to your Licensed Insolvency Trustee
- Providing financial records and documents to your Licensed Insolvency Trustee
- Reporting your monthly income and expenses when required
- Making any required bankruptcy or surplus income payments
- Completing two required insolvency counselling sessions
- Attending a meeting of creditors or examination if required
Who Qualifies for Personal Bankruptcy in Ontario?
To file for personal bankruptcy, you must meet the definition of an insolvent person under Canada’s Bankruptcy and Insolvency Act.
- Owe at least $1,000 to your creditors
- Reside, carry on business, or have property in Canada
- Be unable to pay your debts as they generally become due, or have debts greater than the fair value of your assets
A Licensed Insolvency Trustee can review your financial situation and determine whether personal bankruptcy is available and appropriate for you.
What Are the Alternatives to Personal Bankruptcy in Ontario?
Personal bankruptcy is not the only way to deal with overwhelming debt. Depending on your financial situation, there may be other debt relief options available in Ontario, including:
At David Sklar & Associates, we don’t assume bankruptcy is the only solution. During your consultation, you may explore:
Consumer proposal: Repay an agreed portion of your unsecured debt through one affordable payment while generally keeping your assets.
Debt management plans (DMPs): Repay your debts through a structured payment plan that may reduce or eliminate interest on participating debts.
Debt consolidation loans: Combine multiple debts into one loan and one monthly payment, potentially at a lower interest rate.
A Licensed Insolvency Trustee can review all of your options and help you understand whether bankruptcy, a consumer proposal, or another debt solution is appropriate for your situation.
Is Bankruptcy the Right Option for You
If unsecured debts are overwhelming, bankruptcy can eliminate them—but it’s important to know the pros and cons first.
Our Licensed Insolvency Trustees (LITs) will review your finances, explain all debt relief options, and answer your questions so you can make an informed choice.
Whatever you choose we’ll guide you through the process from start to finish
Common Questions About Personal Bankruptcy in Ontario
Personal bankruptcy can affect your assets, credit and family finances. Here are answers to some of the questions we hear most often from people considering bankruptcy in Ontario.
Will I Lose Everything If I File for Bankruptcy in Ontario?
The good news is that you won’t lose everything you own if you declare bankruptcy. Ontario bankruptcy laws allow you to keep most of your possessions. These include all your clothing and household furniture, tools, and equipment up to a specific dollar value. You can also keep most pension plans and life insurance policies too.
Learn more about what assets you can keep after filing for bankruptcy in Ontario.
Can I Keep My Car If I File for Bankruptcy in Ontario?
Under Ontario bankruptcy law, you can keep one vehicle worth up to $7,117. But what if its value exceeds this amount? In that case, you’ll have to pay out the non-exempt portion (the total amount above the $7,117 limit) to your Licensed Insolvency Trustee for the benefit of your creditors.
Will I Lose My House If I File for Bankruptcy in Ontario?
The answer to this question depends on how much equity is in it. In Ontario, you’re entitled to equity on your principal residence up to $10,783. If your home’s equity doesn’t exceed this limit, you can keep your home.
But what if the equity exceeds $10,783? Then, to keep your home, you’ll need to pay out the non-exempt portion to your creditors. If you have a large amount of home equity and are concerned about losing your home under bankruptcy, speak with your Licensed Insolvency Trustee about alternative debt relief solutions.
Can I Keep a Credit Card During Personal Bankruptcy?
No. When you file for bankruptcy, you must surrender your credit cards to your Licensed Insolvency Trustee. You can obtain a credit card only after you’ve been discharged from bankruptcy. However, you can apply for a secured credit card during your bankruptcy, which requires putting down a deposit before using it.
How Does Personal Bankruptcy Affect My Credit Score?
Filing bankruptcy will result in an R9 rating on your credit score, the lowest you can get in Canada. As a result, your credit score will decline, making it harder for you to qualify for loans.
However, your credit score has likely suffered extensive damage if you’re heavily in debt, routinely make late payments, and have had accounts sent to collections. So, claiming bankruptcy won’t have a significant impact at that point. But it will clear your debts, providing you with a clean slate to rebuild your credit.
How Long Does Bankruptcy Stay on My Credit Report?
A first-time bankruptcy stays on your credit report for six to seven years after you’ve received your discharge. Subsequent bankruptcies on your credit report will last 14 years before being removed.
Does Personal Bankruptcy Affect My Spouse?
Filing for personal bankruptcy will not affect your spouse’s credit score or appear on their credit report. They are not required to give up their assets and will continue to be responsible for paying any loans they’ve entered into by themselves.
However, if you have co-signed any loans with your spouse, they will become 100% liable for the debt once you’ve declared bankruptcy. It’s also possible that assets you hold joint ownership with your spouse may be affected.
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