Frequently Asked Bankruptcy Questions (FAQ)
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.

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.

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.

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

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.

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:

1. With bankruptcy, some of your assets are not protected. With a Consumer proposal your assets are protected.
2. 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.
3. 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 
4. 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. 

If you are over 18 years of age, owe $1000 or more in unsecured debt, aren’t able to pay your debts, and owe more than the value of your assets, you may consider declaring personal bankruptcy in Ontario.

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.

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. 

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.

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.