Personal Bankruptcy & Consumer Proposal FAQ
1. Relying on credit for everyday living expenses.
2. Repeated phone calls and/or letters from creditors.
3. Taking cash advances from one credit card to pay another.
4. Financial troubles that are affecting your family life, your ability to work and/or adding an overall sense of daily stress.
5. Making minimum payments only.
6. Unable to reduce your overall amount of debt even though you are paying the most that you can each month.
7. Staying awake at night worrying about your finances.
LIT's are professionals governed by a federal Act called the Bankruptcy and Insolvency Act and adhere to strict ethics and codes of conduct. It is a LIT’s obligation to see that debtors are treated fairly and equitably and that the rights of debtors and creditors are respected.
LIT's are the only professionals who can administer either a bankruptcy or proposal legislated by the Bankruptcy and Insolvency Act.
• Disclose any significant payment you have made to your creditors in the last 12 months;
• Disclose the details of any assets or property you have disposed of in the last 5 years;
• Attend a meeting of creditors (if one is required);
• Attend any examination under oath (if one is required);
• Provide the Trustee with any books and records that the Trustee requires;
• Assist in the sale or disposal of any assets where they are not being retained;
• Submit monthly income and expense statements;
• Provide information necessary for the trustee to complete your income tax return; and
• Generally assist the Trustee.
1. You have completed two counselling sessions;
2. Your creditors, the Superintendent of Bankruptcy, and the Trustee are not opposing your discharge;
3. You have not had surplus income based on the Superintendent’s Standards during your bankruptcy.
Your household income is reviewed each month and your spouse’s income is considered part of this.
For each month that you are an undischarged bankrupt, you have to submit monthly income and expense statements to the Trustee, showing the amount of household income. This amount is compared to a federally set income guideline. Any amount above the guideline is considered to be surplus income and 50% of this excess is payable to the Trustee.
Required payments can be paid on a monthly payment plan, and in some cases, government refunds such as GST and income tax refunds can be applied.
The fees of a Licensed Insolvency Trustee are regulated under the Bankruptcy and Insolvency Act
1. Fines imposed by the Court;
2. Debts incurred by misrepresentation or fraud;
3. Alimony or child support payments;
4. Debt for damages imposed by the Court for intentional bodily harm, sexual assault or wrongful death;
5. Student loans (if bankruptcy occurs within 7 years of ceasing full or part-time studies);
If your debts are above $250,000, or if the debts are related to a business, then an ordinary proposal may be an option.
• Do not apply for a myriad of credit sources; limit yourself to two credit cards with small credit limits.
• Pay your bills on time. Work with your creditors to allow time to pass to show that your payment habits have improved.
• Be prepared to show stability of employment and residence. Creditors want to know that you have a reliable source of income and that they can easily contact you if necessary.
• Get a secured credit card and pay off the balance every month.
• Keep an emergency store of cash to be used to pay your living expenses if something goes seriously wrong with your income sources.
• If you run into problems, communicate with your creditors and tell them that you intend to pay your bills, but you need a bit of leeway.
• Consider that bankruptcy may well permit you to recover a good credit rating much faster than credit counselling. Negative credit items, including records, remain on your credit report up to seven years.
For questions concerning debt collection activities in your Province, see the links under “Collection Agencies Info & Complaints” on our Links page