How Do I File for Bankruptcy? What are the Costs? How are Student Loans and a Mortgage Affected?

I would recommend that the first step is to assess whether or not a bankruptcy is the right or the best option for you. There are several different options available to a person to deal with their creditors. The decision is going to depend on the specifics of your situation, and on:

• the amount of your debt load
• what your current income and budget looks like
• what types and values of assets you own

The payments that you would be making into a bankruptcy are going to depend on what your income is. There is a guideline published by the Superintendent in Bankruptcy each year which outlines any surplus income payments that you may have. The basic administration costs, counselling session, tax returns....are generally $250 per month but can vary if you are a higher or lower income earner.

Student Loan debts can not be written off in a bankruptcy unless you have been out of school for 7 years. In some hardship cases, they will look at writing off after 5.

If you give your house back to the bank and it was a conventional mortgage, the recourse is going to depend on whether or not this was an insured mortgage (IE: CMHC, Genworth, or other specific loan insurance). It will likely be insured if you did not have a significant down payment when you bought the property. If it was an insured mortgage, the insurance company can pursue you for the shortfall if the bank is not paid in full. If it is not an insured mortgage, then the bank's only recourse is to deal with the house.

 I would recommend that you try to contact one of our Counsellors or Trustees in your area to discuss the specifics of your situation.