In plain language, the concept behind personal bankruptcy in Canada is this: you assign (surrender) everything you own to a Licensed Insolvency Trustee in exchange for the elimination of your debts. Certain exceptions that vary by province allow you to keep some minimum necessities.
Surrendering many of your assets may sound harsh, but keep reading to learn how bankruptcy affects and assists people in real life – how bankruptcy might affect YOU.
Personal bankruptcy is a legal process, governed by federal law (the Bankruptcy & Insolvency Act).
The law is designed to permit an honest but unfortunate debtor to obtain relief from his or her debts while treating creditors equally and fairly.
Bankruptcy is a legal process, and features a “stay of proceedings” that prevents a garnishment or any legal action from happening, and stops your creditors from calling.
※ Who can file bankruptcy?
To go into personal bankruptcy in Canada, a person must have lived or done business in Canada within the last year, and must be insolvent.
※ To be insolvent means:
1. To owe at least $1,000.
2. Not to be able to meet your debts as they are due to be paid.
A Licensed Insolvency Trustee is the only professional who can administer a bankruptcy in Canada.
Licensed Insolvency Trustees are federally licensed. Their fees are regulated and moderate, so the cost of bankruptcy is reasonable.
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