What is bankruptcy?
A: Bankruptcy is a legal process that may discharge you from most of your debts, subject to reasonable conditions.Once you declare bankruptcy, your unsecured creditors cannot take any further steps to recover the money you owe them.
Q: Who can declare bankruptcy?
A: Anyone who owes more than $1,000 and is unable to pay their debts in the normal course.
Q: How much does it cost to declare bankruptcy?
A: There are administrative fees, court costs, mailing costs and government fees your trustee will require you to pay. GTA Credit Solutions charges a small fee.
Q: Can I declare bankruptcy without a trustee?
A: GTA Credit will arrange the trustee.
Q: Will I lose all my assets?
A: There are a few exemptions: Household furnishings to a value of $11,300, personal effects to a value of $5,650, a personal vehicle to a value of $5,650, tools of the trade to a value of $11,300. Certain life insurance policies and RRSPs, and most pensions, are also exempt.
Q: What do I do to declare bankruptcy?
A: Call us. We will discuss with you the specifics of your unique case, including how much you owe and how much you own. (You are required to disclose all assets to your GTA consultant and trustee.) It’s important to keep us up to date on any changes to your address, phone number, employment and income. It’s a good idea to hand over to us all of your credit cards. You will also be required to attend two credit counselling sessions.
Q: What if some of my debts have a guarantor or co-signer?
A: If you declare bankruptcy, a guarantor, co-signer or supplementary credit card holder will likely be held responsible for the debt.
Q: What’s a counselling session?
A: The goal is to prevent you from getting into financial trouble again. A counsellor will help you understand why and how you got into trouble, help you budget, and teach you how to properly use credit in the future.
Q: What effect does bankruptcy have on my credit rating?
A: A first bankruptcy will give you a credit rating of R9, which is the worst rating, for as long as seven years or more after your bankruptcy is discharged.
Q: Can I keep my bank account?
A: You are allowed to have a bank account, but if you owe money to the bank where your account is, you may need to open one at a different bank.
Q: Can I keep my leased car?
A: As a secured debt, it is possible to keep a leased car, but remember that monthly expenses that are simply too high are probably the biggest part of your problem. Giving up the car will reduce your expenses – not only is there the lease payment to consider, but also insurance, gas, repairs and maintenance.
Q: Can my partner and I file a joint bankruptcy?
A: Yes, when two debtors are involved in a close financial relationship and their debts are substantially the same, it is possible to file jointly for bankruptcy. Your GTA Credit advisor and trustee will advise you if they believe a joint filing is in your best interest.
Q: What are the laws pertaining to bankruptcy?
A: The laws that govern bankruptcy are contained in the Bankruptcy and Insolvency Act (the Act), which the federal government established to help unfortunate but honest debtors recover from their financial problems and get a fresh start. The Act details the responsibilities and rights of all parties involved in solving debt problems: the Superintendent of Bankruptcy, the official receivers who represent the Superintendent of Bankruptcy, the court, licensed trustees – and you.
Q: Is bankruptcy my only option?
A: No! There are many options that can help you solve your money problems, including a consumer proposal. Come on in and we’ll talk you through all your options, and then we’ll help you decide which one is right for you.
Q: How does bankruptcy affect alimony or maintenance payments?
A: It doesn’t. Alimony and maintenance are provable claims that will be treated as preferred claims for any amount incurred the year before your bankruptcy. Alimony and maintenance payments must be kept up to date, and a bankruptcy will not stop any action for collection.