Personal Bankruptcy FAQs Ontario
Common Questions Answered
Commonly asked questions about
Bankruptcy in Ontario
The decision to file for bankruptcy should never be made before speaking with an experienced Licensed insolvency trustee. The most frequently asked questions concerning personal bankruptcy in Ontario are listed below. We have guided thousands of clients through the process of personal bankruptcy and assisted them in weighing the advantages and disadvantages of doing so.
Bankruptcy Basics
What is surplus income?
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 impact 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.
Eligibility & Qualification
Do I qualify for bankruptcy in Ontario?
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.
What Bankruptcy Eliminates
What debts can be eliminated by declaring bankruptcy?
Declaring personal bankruptcy eliminates most—if not all—of your unsecured debts. This includes credit cards, lines of credit, student loans (if you’ve been out of school for more than 7 years), personal loans, payday loans, and income tax debt. Some debts cannot be eliminated by declaring personal bankruptcy, including child support, alimony, court-imposed fines, and fraudulent debt.
What debts cannot be eliminated by bankruptcy?
Some debts cannot be eliminated through bankruptcy. These include child support, alimony, student loans (within 7 years of completing studies) court-imposed fines and fraudulent debt.
Assets & Exemptions
What can I keep if I file for bankruptcy?
What you get to keep when you file for personal bankruptcy depends on many factors. If you’re concerned about losing your pension, your RRSPs, your home, or other assets, it would be best to contact us so we can explain how this would look in your situation.
Learn more about what you get to keep when you declare personal bankruptcy
Cost & Process
What does declaring bankruptcy cost?
The cost of declaring personal bankruptcy in Ontario depends on your unique financial situation. Factors such as monthly income, family size, and assets all play a role in the payment required. The licensed insolvency trustee at David Sklar & Associates will be happy to provide you with a free, no-obligation, consultation.
Credit Score Impact
How does declaring bankruptcy affect my credit score?
Bankruptcy stays on your credit report for 6 years after the discharge date, or 7 years after the date filed. If a second bankruptcy is filed, it will remain on your credit report for 14 years after you receive your discharge.
A consumer proposal can be removed from your credit report as soon as 3 years after you’ve paid off all the debts, or a maximum of 6 years from the date it was filed, whichever comes first.
Can you get a personal loan after declaring bankruptcy?
After filing for personal bankruptcy or a Consumer Proposal a lender may not want to take the risk of lending you unsecured credit or loans without some form of security. That’s why secured credit cards are the perfect tool for individuals with poor credit. A secured credit card requires you to pay upfront and create a credit limit with your own money. This way the lender takes virtually no risk. Once you receive your new secured credit card you can continue to use it for everyday purchases and rebuild your credit in the process.
Bankruptcy vs Consumer Proposal
Consumer proposal vs bankruptcy
There are two debt-relief options that we like to recommend—personal bankruptcy and consumer proposals. Either declaring bankruptcy or filing a consumer proposal will help you to clear your debts and protect you from creditors. However, there are some differences to be aware of:
- With bankruptcy, some of your assets are not protected. With a Consumer proposal your assets are protected.
- If your income increases after declaring bankruptcy, your monthly payment will also increase. With a consumer proposal, your monthly payment will not change, regardless of any increases to your income.
- You have the option to pay off your consumer proposal at any time and begin the road to financial recovery sooner. With personal bankruptcy, the length of time it takes to receive your discharge depends on many factors. Learn more about bankruptcy
- In general, there are fewer requirements involved with a consumer proposal than with bankruptcy.
If you have any additional questions about consumer proposal vs personal bankruptcy, we are just a phone call away.
Effect on Family & Employment
Does filing bankruptcy affect my spouse?
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.
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