2024-09-25
What happens if I don’t fulfill my duties during a Bankruptcy?
Bankruptcy
If you’re going through a personal Bankruptcy, one of your main goals is to obtain your discharge — that is, to have your debts cleared so you can start fresh.
Everyone can relate to feelings of depression and hopelessness at various points in their lives. Chronic or fleeting, these emotions may result from a sudden unexpected event such as a job loss, illness, or relationship breakdown — or build up more gradually. Either way, they’re usually warning signs that something’s affecting our mental health. Left unchecked those factors are likely to cause further deterioration in our quality of life and potentially our physical health as well.
May is mental health month, a reminder to check in our state of mind as well as our financial wellbeing. Stress around money is unfortunately a common contributor to poor mental health. Constantly trying to stay one step ahead of creditors, the pressure to make ends meet, and the persistent shame and stigma that continue to surround debt and financial troubles all take their toll.
Bankruptcy isn’t right for everyone. However, in many cases it can be the life-changing solution if someone needs to relieve the burden of debt, improve their quality of life, and get a fresh start.
If you’re like most people, you’ll likely start by looking for answers on the internet. The web can be a good source of information to initially lay out your options. But it can quickly become difficult to sort fact from fiction and separate helpful guidance from self-serving sales pitches.
If you’re researching Bankruptcy online, seek out information from Licensed Insolvency Trustee firms. Bankruptcy is a government-regulated process which may only be administered by a Licensed Insolvency Trustee. Licensed Insolvency Trustees represent neither the debtor or creditor in a Bankruptcy proceeding — regulated by the Office of the Superintendent of Bankruptcy and, by proxy, the Bankruptcy and Insolvency Act itself. They have both the experience and knowledge (as well as the moral and legal duty) to steer you in the right direction.
At MNP LTD, we have a helpful Debt Calculator tool that allows you to compare several options including Bankruptcy, Consumer Proposal, and full repayment of your debt. Or, even better, consider scheduling a Free Confidential Consultation to discuss your situation with a Licensed Insolvency Trustee. With MNP, these sessions are completely hassle free and can help you weigh the pros and cons of several different options, so you know whatever solution you choose is the best one for your unique situation.
Step one, as above is to schedule a Free Confidential Consultation with a Licensed Insolvency Trustee. This meeting is essential to understand the extent of your financial situation and the options that may be available to you. The Licensed Insolvency Trustee will determine whether you qualify for Bankruptcy and whether they believe it is the best, most cost-effective solution to address your debt.
Factors you will discuss in reaching this conclusion include:
If you choose to move forward with Bankruptcy, the Licensed Insolvency Trustee will review the entire process with you in detail, so you understand what to expect moving forward. They will advise on the anticipated cost of your Bankruptcy — both in assets you must surrender and any anticipated surplus income payments — how long the process will likely take, and any additional information required for the filing.
Depending on your situation and how prepared you are for your initial consultation, this process may take place at the same time as the above or require a separate meeting. The Licensed Insolvency Trustee will walk you through all the paperwork required to file your Bankruptcy. You must disclose all debts, assets, sources of income, and household information at this time. Failing to do so can result in termination of your Bankruptcy.
Once the Trustee files this paperwork with the government, you will receive an automatic stay of proceedings: All collections activity and court judgements on applicable debts will be suspended. Your creditors will be legally barred from contacting you or pursuing legal remedy for their debts provided you continue to honor your duties as a bankrupt individual.
While you are bankrupt, there are several duties you must fulfill to earn your eventual discharge. These include:
Your discharge from Bankruptcy is the point at which you are legally released from the debts you owed when you filed your initial paperwork. Discharge eligibility depends on several factors, including:
As a general guideline, following are the timelines for a range of scenarios, assuming nobody objects to the discharge:
Third or subsequent Bankruptcies do not qualify for an automatic discharge and will require the Court to rule on individual cases.
With the potential exception of some debts (e.g. child or spousal support, student loans less than seven years from graduation, etc.) you are now ready to enjoy your financial fresh start. Your credit rating will have taken some damage — likely in the months leading to your Bankruptcy and because of the Bankruptcy itself. We generally advise a slow and steady approach to rebuilding.
Take some time to adjust to your new budget and apply the lessons you learned in your counselling sessions. Once you’re ready, look into secured credit cards and perhaps an RRSP loan for an easy and relatively low-risk re-introduction of credit. Focus on paying off any balance on the credit card every month and / or repay the RRSP loan as quickly as possible.
Remember to check in on yourself as well. How has this process changed your mental health and general outlook on life? Hopefully it’s improved. Use this opportunity to build a support system of family, friends, physicians, counselors, etc. who can help identify changes in your attitude and support you through future financial and emotional challenges before you find yourself slipping into the familiar cycle of debt.
2024-09-25
Bankruptcy
If you’re going through a personal Bankruptcy, one of your main goals is to obtain your discharge — that is, to have your debts cleared so you can start fresh.
2024-06-10
Bankruptcy
The fresh start you obtain after filing a Consumer Proposal or Bankruptcy offers many new paths for managing your day-to-day needs and planning for your future.
2024-05-30
Bankruptcy
Canadians are facing a cost-of-living crisis. With rampant inflation, many have taken on more debt just to make ends meet. With interest rates still high, some households might be considering declaring Bankruptcy for the first, second, or even a third time.
If this sounds like you, don’t worry — many people are in the same situation, and it isn’t anything to be ashamed of. Filing for Bankruptcy or entering a Consumer Proposal might be the solution you need to relieve financial stress and get a fresh start.